PROSPECTUS - Purpose Investments · 2018-10-29 · to a maximum of 130% of its net assets. Use of...

No securities regulatory authority has expressed an opinion about these securities and it is an offence to claim otherwise.

PROSPECTUS

Continuous Offering August 3, 2018

Purpose Diversified Real Asset Fund

Purpose Enhanced US Equity Fund

Purpose Multi-Strategy Market Neutral Fund

Purpose Alternative Yield Fund (formerly, Purpose Diversified Premium Yield Fund)

Purpose Alternative Strategies Fund

This prospectus qualifies for distribution the following shares or units, as the case may be, of the following

funds (each, a “Fund” and collectively, the “Funds”). Each of the Funds is a commodity pool.

Purpose Diversified Real Asset Fund1

Purpose Enhanced US Equity Fund2

Purpose Multi-Strategy Market Neutral Fund3

Purpose Alternative Yield Fund4

Purpose Alternative Strategies Fund4

(1) ETF shares, Series A shares, Series F shares, Series I shares, Series D shares, Series XA shares and Series XF shares. (2) ETF shares, ETF non-currency hedged shares, Series A shares, Series A non-currency hedged shares, Series F shares, Series F non-

currency hedged shares, Series I shares, Series I non-currency hedged shares, Series D shares, Series XA shares and Series XF shares.

(3) ETF units, Class A units, Class F units, Class I units and Class D units. (4) ETF units, Class A units, Class F units and Class D units.

Purpose Fund Corp. (the “Company”) is a mutual fund corporation established under the laws of the

Province of Ontario. The authorized capital of the Company includes an unlimited number of classes of

non-cumulative, redeemable, non-voting shares (each, a “Corporate Class”) and one class of voting

common shares. Each Corporate Class is a separate investment fund having specific investment objectives

and is specifically referable to a separate portfolio of investments. Each such Corporate Class is divided

into separate series of shares. Each of the Purpose Diversified Real Asset Fund and Purpose Enhanced US

Equity Fund is a class of shares of the Company. Each Corporate Class consists of one or more series of

exchange-traded shares and one or more series of Mutual Fund Shares (as defined herein). An unlimited

number of ETF Shares (as defined herein) and Mutual Fund Shares are authorized for issuance.

Each of the Purpose Multi-Strategy Market Neutral Fund, Purpose Alternative Yield Fund and Purpose

Alternative Strategies Fund (collectively, the “Purpose Trust Funds”) is a mutual fund established as a

trust under the laws of the Province of Ontario. The authorized capital of each of the Purpose Trust Funds

includes one or more classes of exchange-traded units (each such class, “ETF Units”) and one or more

The Purpose Enhanced US Equity Fund employs leverage to increase exposure to its portfolio securities

to a maximum of 130% of its net assets. Use of leverage involves additional risk. See “Risk Factors – Use

of Leverage”. At the same time, the Purpose Enhanced US Equity Fund will sell short market index

futures to reduce the Fund’s exposure to the equity markets associated with the leveraged portion of its

portfolio to 100%. An investment in the Purpose Enhanced US Equity Fund is not intended as a complete

investment program and is appropriate only for investors who have the capacity to absorb a loss of some

or all of their investment.

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classes of Mutual Fund Units (as defined herein). An unlimited number of ETF Units and the Mutual Fund

Units are authorized for issuance.

The Purpose Enhanced US Equity Fund has received exemptive relief from the Canadian securities

regulatory authorities to permit the Fund to utilize leverage to achieve market exposure to its portfolio

targeted at 130% of the Fund’s net asset value and to borrow up to 35% of the Fund’s net asset value to

implement its investment strategies. There is no assurance that the use of leverage will enhance returns and

in fact the strategy may reduce returns. If the securities in the Fund’s portfolio decline in value, the leverage

component will cause net asset value to decrease in excess of that which would otherwise have occurred.

Purpose Investments Inc. (the “Manager” or “Purpose”) is the manager and portfolio manager of the Funds

and is responsible for the administration of the Funds. The Manager has engaged Neuberger Berman Breton

Hill ULC (formerly, Breton Hill Capital Ltd.), as the investment sub-advisor (the “Investment Advisor”)

for the Funds. See “Organization and Management Details of the Funds”.

The Toronto Stock Exchange (the “TSX”) has conditionally approved the listing of the ETF Units of the

Purpose Alternative Yield Fund and the Purpose Alternative Strategies Fund (collectively, the “New

Purpose Funds”) on the TSX. The listing of the ETF Units is subject to each New Purpose Fund fulfilling

all of the requirements of the TSX on or before July 26, 2019. Subject to satisfying the TSX’s original

listing requirements, the ETF Units of the New Purpose Funds will be listed on the TSX and offered on a

continuous basis, and an investor will be able to buy or sell such ETF Units on the TSX through registered

brokers and dealers in the Province or Territory where the investor resides.

The ETF shares and ETF non-currency hedged shares (collectively, the “ETF Shares”) and ETF Units, as

applicable, of the Funds (other than the New Purpose Funds) are listed on the TSX and offered on a

continuous basis, and an investor may buy or sell ETF Units and ETF Shares of the Funds (other than the

New Purpose Funds) on the TSX through registered brokers and dealers in the Province or Territory where

the investor resides.

Investors will incur customary brokerage commissions in buying or selling the ETF Units and ETF Shares.

The TSX ticker symbol for (a) the ETF shares of the Purpose Diversified Real Asset Fund is “PRA”, (b)

the ETF shares of the Purpose Enhanced US Equity Fund is “PEU”, (c) the ETF Non-Currency Hedged

Shares of the Purpose Enhanced US Equity Fund is “PEU.B”, (d) the ETF Units of the Purpose Multi-

Strategy Market Neutral Fund is “PMM”, (e) the ETF Units of the Purpose Alternative Yield Fund is

“PDYF” and (f) the ETF Units of the Purpose Alternative Strategies Fund is “PALT”.

The ETF Shares and ETF Units are Canadian dollar denominated.

The Purpose Diversified Real Asset Fund seeks to provide shareholders with exposure to a diversified

portfolio of asset classes that are directly or indirectly linked to physical assets with positive correlation to

inflation and are expected to maintain their real (after inflation) value over time. These assets may include

precious metals and related equities; industrial, energy and agricultural commodities and related equities;

real estate investment trusts (REITs); emerging market (EM) currencies; real return bonds and treasury

inflation-protected securities (TIPS); and cash.

The Purpose Enhanced US Equity Fund seeks to provide shareholders with long-term capital appreciation

and a superior risk adjusted return relative to the broad U.S. equity markets. The Fund aims to provide

returns in excess of the broad U.S. equity markets by investing in a portfolio of U.S. listed equities while

maintaining a similar level of volatility as the broad U.S. equity markets. The Fund will employ leverage

to increase its long portfolio exposure and to hedge the increased market risk associated with the leveraged

portion of the portfolio. The Fund will implement its hedging strategy through the use of derivative

instruments including by selling market index futures contracts. The Fund will borrow up to a maximum of

35% of its net assets, of which up to a maximum of 30% will be used for additional investment in its long

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portfolio, and up to a maximum of 5% will be used as margin in connection with the Fund’s hedging

strategy.

The Purpose Multi-Strategy Market Neutral Fund seeks to provide unitholders with positive absolute

returns that are not correlated to the broader securities markets. The Fund will utilize a multi-strategy

approach by allocating its assets across various asset classes including equities, currencies and

commodities.

The Purpose Alternative Yield Fund seeks to provide unitholders with (a) high monthly income and (b)

long-term capital appreciation. The Fund will achieve its investment objectives by investing in various asset

classes including, but not limited to, equities, fixed income securities, currencies and commodities.

The Purpose Alternative Strategies Fund seeks to provide unitholders with long-term positive absolute

returns in all market conditions while targeting (a) volatility not higher than the broad equity markets and

(b) low correlation to the broad equity and fixed income securities markets. The Fund will utilize a multi-

strategy approach by allocating its assets across various asset classes including equities, fixed income

securities, currencies and commodities.

The Manager, on behalf, of the Funds, has entered, or will enter, into agreements with registered dealers

(each a “Designated Broker” or “Dealer”), which amongst other things enables Designated Brokers and

Dealers to purchase and redeem ETF Shares or ETF Units, as the case may be, directly from the Funds.

Securityholders will be able to redeem ETF Shares or ETF Units, as the case may be, for cash at a

redemption price of (a) (i) in respect of the ETF Shares, 95% of the closing price for the ETF Shares on the

TSX and (ii) in respect of the ETF Units, 95% of the market price of the ETF Units, on the effective date

of redemption and (b) the net asset value per ETF Share or ETF Unit, as the case may be. “Market price”

means the weighted average trading price of the ETF Units on the Canadian marketplaces on which the

ETF Units have traded on the effective date of redemption. Securityholders may also exchange a Prescribed

Number of Securities (as defined herein) (or an integral multiple thereof) for cash and Baskets of Securities

(as defined herein) held by a Fund. The Funds will issue ETF Shares and ETF Units directly to Designated

Brokers and Dealers.

You should carefully read this prospectus, including a description of the principal risk factors under “Risk

Factors”, before you decide to invest in the Funds. You should carefully consider whether your financial

condition permits you to participate in an investment in the Funds. The securities of the Funds are highly

speculative and involve a high degree of risk. You may lose a substantial portion or even all of the money

you place in a Fund. The risk of loss in trading commodity futures contracts can be substantial. In

considering whether to invest in a Fund, you should be aware that trading commodity futures contracts can

quickly lead to large losses as well as gains. Such trading losses can sharply reduce the net asset value of a

Fund and consequently the value of your interest in a Fund. Also, market conditions may make it difficult

or impossible for a Fund to liquidate a position.

The Funds are subject to certain conflicts of interest. The Funds will be subject to the charges payable by it

as described in this prospectus that must be offset by revenues and trading gains before an investor is entitled

to a return on his or her investment. It may be necessary for a Fund to make substantial trading profits to

avoid depletion or exhaustion of their assets before an investor is entitled to a return on his or her

investment.

Participation in transactions in commodity futures contracts involves the execution and clearing of trades

on or subject to the rules of a foreign market. None of the Canadian securities regulatory authorities or

Canadian exchanges regulates activities of any foreign markets, including the execution, delivery and

clearing transactions, or has the power to compel enforcement of the rule of a foreign market or any

applicable foreign law. Generally, any foreign transaction will be governed by applicable foreign laws. This

is true even if the foreign market is formally linked to a Canadian market so that a position taken on a

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market may be liquidated by a transaction on another market. Moreover, such laws or regulations will vary

depending on the foreign country in which the transaction occurs. For these reasons, entities such as the

Purpose Diversified Real Asset Fund and the Purpose Trust Funds that trade commodity futures contracts

may not be afforded certain of the protective measures provided by Canadian legislation and the rules of

Canadian exchanges. In particular, funds received from customers for transactions may not be provided the

same protection as funds received in respect of transactions on Canadian exchanges.

Each of the Funds is a mutual fund but certain provisions of securities legislation designed to protect

investors who purchase securities of mutual funds do not apply to it. The shares or units of the Funds may

only be purchased by investors through registered brokers and dealers registered to sell securities of mutual

funds which are subject to National Instrument 81-104 – Commodity Pools in accordance with the

requirements of Part 4 of that Instrument.

These brief statements do not disclose all the risks and other significant aspects of investing in the

Funds. You should therefore carefully read this prospectus, including a description of the principal

risk factors under “Risk Factors”, before you decide to invest in the Funds.

No underwriter has been involved in the preparation of this prospectus or has performed any review

of the contents of the prospectus. The Canadian securities regulators have provided the Funds with a

decision exempting it from the requirement to include a certificate of an underwriter in this prospectus. The

Designated Brokers and Dealers are not underwriters of the Funds in connection with the distribution of

ETF Shares and ETF Units under this prospectus.

For a discussion of the risks associated with an investment in ETF Shares, ETF Units, Mutual Fund Shares

and Mutual Fund Units, see “Risk Factors”.

Table of Contents

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GLOSSARY .................................................................. 1

PROSPECTUS SUMMARY ........................................ 7

SUMMARY OF FEES AND EXPENSES .................. 24

OVERVIEW OF THE LEGAL STRUCTURE OF

THE FUNDS ....................................................... 31

INVESTMENT OBJECTIVES ................................... 33

INVESTMENT STRATEGIES .................................. 34 Securities Lending ............................................... 39 Use of Derivative Instruments ............................. 39 Action on Portfolio Adjustment ........................... 40 Take-over Bids for Constituent Issuers ................ 40

OVERVIEW OF THE SECTORS IN WHICH

THE FUNDS INVEST ........................................ 40

INVESTMENT RESTRICTIONS .............................. 41

FEES AND EXPENSES ............................................. 41 Fees and Expenses Payable by the Funds ............ 41 Fees and Expenses Payable Directly by

Securityholders .................................................... 45

ANNUAL RETURNS, MANAGEMENT

EXPENSE RATIO AND TRADING

EXPENSE RATIO ............................................... 46

RISK FACTORS ......................................................... 47 General Risks Relating to an Investment

in the Funds ......................................................... 47 Additional Risks Relating to an

Investment in Certain Funds ................................ 54 Risk Ratings of the Funds .................................... 58

DIVIDEND/DISTRIBUTION POLICY ..................... 60 Dividend/Distribution Reinvestment Plan ........... 61 Pre-Authorized Cash Contribution ...................... 62 Systematic Withdrawal Plan ................................ 63

PURCHASES OF SHARES/UNITS ........................... 64 Initial Investment in the New Purpose

Funds ................................................................... 64 Continuous Distribution ....................................... 64 Designated Brokers .............................................. 64 Issuance of ETF Shares/ETF Units ...................... 65 Issuance of Mutual Fund Shares/Mutual

Fund Units ........................................................... 66 Buying and Selling Securities .............................. 68 U.S. Dollar Purchase Option ................................ 69 Special Considerations for ETF

Shares/ETF Units ................................................. 69 Non-Resident Securityholders ............................. 69 Registration and Transfer through CDS –

ETF Shares/ETF Units ......................................... 70

REDEMPTION, EXCHANGE AND SWITCHES

OF SECURITIES................................................. 71 Redemption of Securities for Cash ...................... 71 Exchange of ETF Shares/ETF Units for

Baskets of Securities ............................................ 72

Requests for Exchange and Redemption.............. 73 Suspension of Exchange and Redemption ........... 73 Costs Associated with Exchange and

Redemption .......................................................... 73 Exchange and Redemption of ETF

Shares/ETF Units through CDS

Participants .......................................................... 73 Switching ETF Shares ......................................... 74 Switching Mutual Fund Shares ............................ 74 No Switching of Units ......................................... 75 Costs Associated with Switches ........................... 75 Suspension and Restrictions on Switches ............ 75 Short-Term Trading ............................................. 75

PRICE RANGE AND TRADING VOLUME OF

ETF SHARES/ETF UNITS ................................. 76

INCOME TAX CONSIDERATIONS ........................ 78 PFC Funds ........................................................... 79 Purpose Trust Funds ............................................ 82

ELIGIBILITY FOR INVESTMENT .......................... 87

ORGANIZATION AND MANAGEMENT

DETAILS OF THE FUNDS ................................ 87 Officers and Directors of the Company ............... 87 Officers and Directors of the Manager,

Promoter and Trustee ........................................... 88 The Investment Advisor....................................... 92 Independent Review Committee .......................... 94 Custodian and Securities Lending Agent ............. 96 Auditor ................................................................. 97 Registrar and Transfer Agent and Plan

Agent ................................................................... 97 Promoter .............................................................. 97

CALCULATION OF NET ASSET VALUE .............. 97 Valuation Policies and Procedures ....................... 97 Reporting of Net Asset Value .............................. 99

DESCRIPTION OF THE SECURITIES

DISTRIBUTED ................................................... 99 Description of the Securities Distributed –

PFC Funds ........................................................... 99 Description of the Securities Distributed –

Purpose Trust Funds ............................................ 99 Certain Provisions of the Shares – PFC

Funds ................................................................. 100 Certain Provisions of the Units – Purpose

Trust Funds ........................................................ 100 Exchange of Securities for Baskets of

Securities – ETF Shares/ETF Units ................... 100 Redemption of Securities for Cash .................... 100 Modification of Terms ....................................... 101

SECURITYHOLDER MATTERS ............................ 101 Meeting of Shareholders – PFC Funds .............. 101 Meeting of Unitholders – Purpose Trust

Funds ................................................................. 101 Matters Requiring Securityholders’

Approval ............................................................ 102

Table of Contents

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Amendments to the Declaration of Trust –

Purpose Trust Funds .......................................... 103 Reporting to Securityholders ............................. 104

TERMINATION OF THE FUNDS .......................... 104 PFC Funds ......................................................... 104 Purpose Trust Funds .......................................... 104

PRINCIPAL SECURITYHOLDERS OF THE

FUNDS .............................................................. 104

INTERESTS OF MANAGEMENT AND

OTHERS IN MATERIAL TRANSACTIONS .. 106

PROXY VOTING DISCLOSURE FOR

PORTFOLIO SECURITIES HELD .................. 106

MATERIAL CONTRACTS...................................... 107

EXPERTS ................................................................. 108

EXEMPTIONS AND APPROVALS ........................ 108

PURCHASERS’ STATUTORY RIGHTS OF

WITHDRAWAL AND RESCISSION .............. 109

DOCUMENTS INCORPORATED BY

REFERENCE .................................................... 109

CERTIFICATE OF THE COMPANY (ON

BEHALF OF THE PFC FUNDS),

MANAGER AND PROMOTER ....................... C-1

CERTIFICATE OF THE PURPOSE TRUST

FUNDS, TRUSTEE, MANAGER AND

PROMOTER ..................................................... C-2

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GLOSSARY

Unless otherwise indicated, all references to dollar amounts in this prospectus are to Canadian dollars and

all references to times in this prospectus are to Toronto time.

ADRs – means American Depositary Receipts. An ADR is a type of negotiable financial security that is

traded on a local stock exchange but which represents a security that is issued by a foreign publicly-listed

company.

Basket of Securities – in relation to a particular Fund, means a group of securities or assets determined by

the Manager from time to time representing the Constituent Securities of the Fund.

Business Day – means any day on which the TSX or such other designated exchange on which the ETF

Shares or ETF Units of a fund, as applicable, may be listed from time to time is open for trading.

Canadian securities legislation – means the applicable securities legislation in force in each Province and

Territory of Canada, all regulations, rules, orders and policies made thereunder and all multilateral and

national instruments adopted by the securities regulatory authorities.

CDS – means CDS Clearing and Depository Services Inc.

CDS Participant – means a participant in CDS that holds ETF Shares or ETF Units, as the case may be, on

behalf of beneficial owners of ETF Shares or ETF Units, as applicable.

Class A Units – means currency hedged mutual fund units of a Purpose Trust Fund.

Class D Units – means currency hedged mutual fund units of a Purpose Trust Fund.

Class F Units – means currency hedged mutual fund units of a Purpose Trust Fund.

Class I Units – means currency hedged mutual fund units of a Purpose Trust Fund.

Company – means Purpose Fund Corp.

Constituent Issuers – means for each Fund, those issuers whose securities are included in the portfolio of

a Fund from time to time.

Constituent Securities – means for each Fund, the securities of the Constituent Issuers or, where applicable,

derivatives such as options, futures, forward contracts and swaps.

Corporate Class – means a class of non-cumulative, redeemable, non-voting shares of the Company.

Custodian – means CIBC Mellon Trust Company.

Dealer – means a registered dealer (that may or may not be a Designated Broker), that has entered, or will

enter, into a Dealer Agreement with the Manager, pursuant to which the Dealer may subscribe for ETF

Shares or ETF Units of a Fund as described under “Purchases of Securities – Issuance of Securities”.

Dealer Agreement – means an agreement between the Manager, on behalf of one or more Funds, and a

Dealer, as amended from time to time.

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Declaration of Trust – means the master declaration of trust dated October 7, 2013, as amended or as

amended and restated from time to time, pursuant to which the Purpose Trust Funds (along with certain

other exchange traded mutual funds managed by the Manager) have been established.

Designated Broker – means a registered dealer that has entered, or will enter, into a Designated Broker

Agreement with the Manager, on behalf of one or more Funds pursuant to which the Designated Broker

agrees to perform certain duties in relation to such Funds.

Designated Broker Agreement – means an agreement between the Manager, on behalf of a Fund, and a

Designated Broker, as amended from time to time.

Distribution Payment Date – means a day on which a Fund pays a dividend or distribution, as the case may

be, to its securityholders and that is no later than the 10th Business Day following the applicable Distribution

Record Date.

Distribution Record Date – means a date determined by the Manager as a record date for the determination

of securityholders of a Fund entitled to receive a dividend or distribution, as the case may be.

DPSPs – means deferred profit sharing plans as defined in the Tax Act.

ETF – means an exchange-traded fund.

ETF Non-Currency Hedged Share – in relation to the Purpose Enhanced US Equity Fund, means a non-

currency hedged ETF Share of the Fund.

ETF Share – in relation to a PFC Fund, means an ETF currency hedged share or an ETF Non-Currency

Hedged Share of the ETF series of a PFC Fund or a share of the ETF series of another Purpose Corporate

Fund, as applicable.

ETF Shareholder – means a holder of an ETF Share.

ETF Switch Date – means Wednesday of each week, or more frequently as may be determined by the

Manager.

ETF Unit – means an ETF currency hedged unit of a Purpose Trust Fund.

Funds – means collectively, the Purpose Diversified Real Asset Fund, Purpose Enhanced US Equity Fund,

Purpose Multi-Strategy Market Neutral Fund, Purpose Alternative Yield Fund and Purpose Alternative

Strategies Fund and “Fund” means any one of them.

futures contracts – means standardized contracts entered into on domestic or foreign exchanges that call

for the future delivery of specified quantities of various assets such as stocks, bonds, agricultural

commodities, industrial commodities, currencies, financial instruments, energy products or metals at a

specified time and place. The terms and conditions of a futures contract with respect to a particular

commodity are standardized and as such are not subject to negotiation between the buyer and the seller of

the contract. Contractual obligations under the contract may be satisfied either by taking (in the case of the

buyer) or making (in the case of the seller), physical delivery of an approved grade of commodity or by

making an offsetting sale (in the case of the buyer) or purchase (in the case of the seller) of an equivalent

but opposite futures contract on the same exchange prior to the designated date of delivery. The difference

between the price at which the futures contract is sold or purchased and the price paid for brokerage

commissions constitutes the profit or loss to the trader.

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HST – means the harmonized sales tax imposed under the Excise Tax Act (Canada) that is applicable in

certain Provinces of Canada.

Investment Advisor – means NBBH.

Investment Advisory Agreement – means the investment sub-advisory agreement dated as of January 28,

2013 between Purpose, the Investment Advisor and certain funds managed by Purpose, as amended and as

may be amended from time to time.

IRC – means the Independent Review Committee of the Funds.

Manager – means Purpose Investments Inc., the manager and portfolio manager of the Funds.

Mutual Fund Shares – means collectively the Series A Shares, Series F Shares, Series I Shares, Series D

Shares, Series XA Shares and Series XF Shares of the PFC Funds or the Series A Shares, Series F Shares,

Series I Shares, Series D Shares, Series XA Shares and Series XF Shares of another Purpose Corporate


Mutual Fund Units – means collectively the Class A Units, Class F Units, Class I Units and Class D Units

of a Purpose Trust Fund.

NAV of the ETF Shares and NAV per ETF Share – means the net asset value of a PFC Fund attributable

to the ETF Shares of the Fund and the net asset value per ETF Share of the Fund, calculated by the Valuation

Agent as described under “Calculation of Net Asset Value”.

NAV of the ETF Units and NAV per ETF Unit – means the net asset value of a Purpose Trust Fund

attributable to the ETF Units of a Purpose Trust Fund and the net asset value per ETF Unit of a Purpose

Trust Fund, calculated by the Valuation Agent as described under “Calculation of Net Asset Value”.

New Purpose Funds – means collectively, the Purpose Alternative Yield Fund and the Purpose Alternative

Strategies Fund and New Purpose Fund means any one of them.

NI 81-102 – means National Instrument 81-102 – Investment Funds.

NI 81-104 – means National Instrument 81-104 – Commodity Pools.

NI 81-107 – means National Instrument 81-107 – Independent Review Committee for Investment Funds.

Non-Currency Hedged Mutual Fund Shares – in relation to the Purpose Enhanced US Equity Fund, means

a non-currency hedged Mutual Fund Share of the Fund.

Neuberger Berman Breton Hill ULC or NBBH – means the investment sub-advisor of the Funds.

Other Securities – means ADRs or securities of investment funds other than Constituent Securities of a

Fund, including ETFs, mutual funds or other public investment funds or derivative instruments.

Permitted Merger – has the meaning ascribed to such term under “Securityholder Matters – Matters

Requiring Securityholders’ Approval”.

PFC Custodian Agreement – means the custodial services agreement dated May 19, 2015, as amended

between the Manager on behalf of the PFC Funds and certain other funds managed by Purpose and CIBC

Mellon Trust Company, as custodian.

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PFC Funds – means collectively, the Purpose Diversified Real Asset Fund and the Purpose Enhanced US

Equity Fund and “PFC Fund” means any one of them.

Plan Agent – means TSX Trust Company, plan agent for ETF Shares and ETF Units for the Dividend or

Distribution Reinvestment Plan, as applicable.

Plan Participant and ETF Plan Securities – has the meaning ascribed to such term under

“Dividend/Distribution Policy – Dividend/Distribution Reinvestment Plan”.

Prescribed Number of Securities – means the number of ETF Shares or ETF Units, as the case may be,

determined by the Manager from time to time for the purpose of subscription orders, exchanges,

redemptions or for other purposes.

Proxy Voting Guidelines – has the meaning ascribed to such term under “Proxy Voting Disclosure for

Portfolio Securities Held”.

PTF Custodian Agreement – means the custodial services agreement dated August 8, 2013, as amended

between the Manager on behalf of the Purpose Trust Funds and certain other mutual fund trusts managed

by Purpose and CIBC Mellon Trust Company, as custodian.

Purpose – means Purpose Investments Inc.

Purpose Corporate Funds – means collectively, any Corporate Class of Purpose Fund Corp. which may

be established from time to time and “Purpose Corporate Fund” means any one of them.

RDSPs – means registered disability savings plans as defined in the Tax Act.

Registered Plans – means collectively, RRSPs, RRIFs, DPSPs, RDSPs, RESPs and TFSAs.

Reinvestment Plan – means the dividend or distribution reinvestment plan of the Funds, the key terms of

which are described under “Dividend/Distribution Policy – Dividend/Distribution Reinvestment Plan”.

RESPs – means registered education savings plans as defined in the Tax Act.

RRIFs – means registered retirement income funds as defined in the Tax Act.

RRSPs – means registered retirement savings plans as defined in the Tax Act.

securities regulatory authorities – means the securities commission or similar regulatory authority in each

Province and Territory of Canada that is responsible for administering the Canadian securities legislation

in force in such Province or Territory.

Security – means a redeemable, transferable share in the capital of the Company (other than a Common

Share) or unit in the capital of a Purpose Trust Fund, as the case may be, which represents an equal,

undivided interest in the net assets of the series of the class or of the class, as the case may be, to which

such security belongs.

securityholder – means a holder of an ETF Share, ETF Unit, Mutual Fund Share or Mutual Fund Unit, as

applicable.

Series A Shares – means currency hedged mutual fund shares or non-currency hedged mutual fund shares

of a PFC Fund or another Purpose Corporate Fund, as applicable.

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Series D Shares – means currency hedged mutual fund shares of a PFC Fund or another Purpose Corporate


Series F Shares – means currency hedged mutual fund shares or non-currency hedged mutual fund shares


Series I Shares – means currency hedged mutual fund shares or non-currency hedged mutual fund shares


Series XA Shares – means currency hedged mutual fund shares of a PFC Fund or another Purpose

Corporate Fund, as applicable.

Series XF Shares – means currency hedged mutual fund shares of a PFC Fund or another Purpose

Corporate Fund, as applicable.

share – means an ETF Share or a Mutual Fund Share, as applicable.

Switch – means a switch of (a) ETF Shares of one Purpose Corporate Fund to ETF Shares of another

Purpose Corporate Fund, (b) Mutual Fund Shares of one Purpose Corporate Fund to Mutual Fund Shares

of another Purpose Corporate Fund or (c) of one series of Mutual Fund Shares of the Purpose Corporate

Fund to another series of Mutual Fund Shares of the same Purpose Corporate Fund.

Switch Date – means any Business Day.

Switch Fund Rules – means the provisions of the Tax Act which eliminated the ability of shareholders of

a mutual fund corporation to switch between different share classes of such a corporation on a tax-deferred

basis.

Switch NAV Price – is equal to the NAV per share of the relevant Purpose Corporate Fund as of the close

of trading on the applicable Switch Date.

Switch Notice Date – by 4:00 p.m. (Toronto time) one Business Day before the Switch Date.

Tax Act – means the Income Tax Act (Canada), as now or hereafter amended, or successor statutes and

includes all regulations promulgated thereunder.

Tax Proposals – means all specific proposals to amend the Tax Act announced by or on behalf of the

Minister of Finance (Canada) prior to the date hereof.

TFSAs – means tax-free savings accounts as defined in the Tax Act.

Trading Day – means a day on which: (a) a regular session of the TSX (or such other designated exchange

on which the ETF Shares or ETF Units of a Fund may be listed from time to time) is held; (b) the primary

market or exchange for the majority of the securities held by the Fund is open for trading; and (c) if

applicable, the index provider calculates and publishes data relating to the index.

TSX – means the Toronto Stock Exchange.

unit – means an ETF Unit or Mutual Fund Unit, as applicable.

U.S. – means the United States of America.

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Valuation Agent – means the company appointed from time to time by the Manager to calculate the NAV

of each series of shares of the PFC Funds and the NAV of each class of units of the Purpose Trust Funds,

and the NAV per share (or a series) or unit, as applicable, of the Funds. The initial Valuation Agent is CIBC

Mellon Global Securities Services Company.

Valuation Date – means each Trading Day and any other day designated by the Manager on which the

NAV of each series of shares of the PFC Funds or the NAV of each class of units of the Purpose Trust

Funds, as the case may be, will be calculated.

Valuation Time – means 4:00 p.m. (Toronto time) or such other time the Manager deems appropriate on

each Valuation Date.

$ – means Canadian dollars unless otherwise indicated.

7

PROSPECTUS SUMMARY

The following is a summary of the principal features of the securities of the Funds offered hereby and

should be read together with the more detailed information and statements contained elsewhere in this

prospectus or incorporated by reference in this prospectus.

Issuers: Purpose Diversified Real Asset Fund


(collectively, the “PFC Funds”)


Purpose Alternative Yield Fund (formerly, Purpose Diversified Premium

Yield Fund)


(collectively, the “Purpose Trust Funds”)

The PFC Funds and the Purpose Trust Funds are collectively referred to

herein as the “Funds” and each, a “Fund”.

Each PFC Fund is a class of shares of Purpose Fund Corp. (the “Company”).

The Company is a mutual fund corporation established under the laws of the

Province of Ontario and each PFC Fund is a class of shares of the Company.

Each of the Purpose Trust Funds is an exchange traded mutual fund established

as a trust under the laws of the Province of Ontario pursuant to the Declaration

of Trust (as defined herein).

The Funds are commodity pools. Purpose Investments Inc. (the “Manager” or

“Purpose”) is the manager, portfolio manager and promoter of the Funds.

See “Overview of the Legal Structure of the Funds”.

Offering: Each class of shares of the Company (other than the common shares of the

Company) is a separate investment fund (each, a “Corporate Class”) having

specific investment objectives and is specifically referable to a separate

portfolio of investments. Each such Corporate Class consists of one or more

exchange-traded series of shares and one or more series of Mutual Fund Shares

(as defined herein). The ETF Shares (as defined herein) and Mutual Fund

Shares of the PFC Funds are being offered pursuant to this prospectus. The

ETF Shares of the PFC Funds are Canadian dollar denominated. The Mutual

Fund Shares of the PFC Funds are offered in Canadian dollar and U.S. dollar

denominations. See “Overview of the Legal Structure of the Funds”.

Each Purpose Trust Fund is offering a class of exchange-traded units (the

“ETF Units”) and one or more classes of Mutual Fund Units (as defined

herein). The ETF Units of the Purpose Trust Funds are Canadian dollar

denominated. The Mutual Fund Units of the Purpose Trust Funds are offered

8

in Canadian dollar and U.S. dollar denominations. See “Overview of the Legal

Structure of the Funds”.

ETF Shares/ETF Units

ETF shares and ETF non-currency hedged shares (collectively, the “ETF

Shares”) and ETF Units are available to all investors through Designated

Brokers (as defined herein) and Dealers (as defined herein).

Series A Shares/Class A Units

Series A Shares and Class A Units are available to all investors through

authorized dealers.

Series F Shares/Class F Units

Series F Shares and Class F Units are available to investors who have fee based

accounts with their dealer.

Series I Shares/Class I Units

Series I Shares and Class I Units are available to institutional investors or to

other investors on a case-by-case basis, at the Manager’s discretion.

Series D Shares/Class D Units

Series D Shares and Class D Units are available to investors who have an

account with an eligible online or other discount brokerage firm.

Series XA Shares and Series XF Shares

Series XA Shares and Series XF Shares are available to investors who wish to

acquire shares of a Purpose Corporate Fund by exchanging eligible shares of

Canadian or U.S. public companies.

To redeem Series XA Shares or Series XF Shares of a Purpose Corporate Fund,

a shareholder must switch into a separate series of shares of the Purpose In-

Kind Exchange Fund. The Purpose In-Kind Exchange Fund is a separate fund

that is a class of shares of the Company which offers one or more series of

shares on a prospectus exempt basis including to accredited investors. Series

XA Shares and Series XF Shares are Canadian dollar denominated.

Continuous

Distribution:

The shares or units, as the case may be, of the Funds offered hereby are being

issued and sold on a continuous basis and there is no maximum number of

shares or units, as applicable, that may be issued.

The Toronto Stock Exchange (the “TSX”) has conditionally approved the

listing of the ETF Units of the Purpose Alternative Yield Fund and the Purpose

Alternative Strategies Fund (collectively, the “New Purpose Funds”) on the

TSX. The listing of the ETF Units is subject to each New Purpose Fund

fulfilling all of the requirements of the TSX on or before July 26, 2019. Subject

9

to satisfying the TSX’s original listing requirements, the ETF Units of the New

Purpose Funds will be listed on the TSX and offered on a continuous basis,

and an investor will be able to buy or sell such ETF Units on the TSX through

registered brokers and dealers in the Province or Territory where the investor

resides.

The ETF Units and ETF shares and ETF non-currency hedged shares

(collectively, the “ETF Shares”), as applicable, of the Funds (other than the

New Purpose Funds) are listed on the TSX and offered on a continuous basis,

and an investor may buy or sell ETF Units and ETF Shares of the Funds (other

than the New Purpose Funds) on the TSX through registered brokers and

dealers in the Province or Territory where the investor resides.

Investors will incur customary brokerage commissions in buying or selling the

ETF Units and ETF Shares. The TSX ticker symbol for (a) the ETF shares of

the Purpose Diversified Real Asset Fund is “PRA”, (b) the ETF shares of the

Purpose Enhanced US Equity Fund is “PEU”, (c) the ETF Non-Currency

Hedged Shares of the Purpose Enhanced US Equity Fund is “PEU.B”, (d) the

ETF Units of the Purpose Multi-Strategy Market Neutral Fund is “PMM”, (e)

the ETF Units of the Purpose Alternative Yield Fund is “PDYF” and (f) the

ETF Units of the Purpose Alternative Strategies Fund is “PALT”.


The Funds issue ETF Shares and ETF Units directly to Designated Brokers and

Dealers. From time to time as may be agreed between the Manager and the

Designated Brokers and Dealers, the Designated Brokers and Dealers may

agree to accept Constituent Securities as payment for ETF Shares or ETF

Units, as the case may be, from prospective purchasers.

The Mutual Fund Shares and Mutual Fund Units of the Funds may only be

purchased by investors through registered brokers and dealers registered to sell

securities of mutual funds which are subject to National Instrument 81-104 –

Commodity Pools in accordance with the requirements of Part 4 of that

Instrument. The Manager may reject a purchase order within two Business

Days of receiving it. If a purchase order is rejected, the purchase price will be

immediately refunded without interest. An investor who wishes to purchase

Mutual Fund Shares or Mutual Fund Units must invest a minimum of $5,000

per account and $100 for each additional transaction. There is no minimum for

the Series I Shares or Class I Units.

See “Purchases of Securities – Issuance of Securities” and “Purchases of

Securities – Buying and Selling Securities”.

Investment

Objectives:


The Purpose Diversified Real Asset Fund seeks to provide shareholders with

exposure to a diversified portfolio of asset classes that are directly or indirectly

linked to physical assets with positive correlation to inflation and are expected

to maintain their real (after inflation) value over time. These assets may include

precious metals and related equities; industrial, energy and agricultural

10

commodities and related equities; real estate investment trusts (REITs);

emerging market (EM) currencies; real return bonds and treasury inflation-

protected securities (TIPS); and cash.


The Purpose Enhanced US Equity Fund seeks to provide shareholders with

long-term capital appreciation and a superior risk adjusted return relative to the

broad U.S. equity markets. The Fund aims to provide returns in excess of the

broad U.S. equity markets by investing in a portfolio of U.S. listed equities

while maintaining a similar level of volatility as the broad U.S. equity markets.

The Fund will employ leverage to increase its long portfolio exposure and to

hedge the increased market risk associated with the leveraged portion of the

portfolio. The Fund will implement its hedging strategy through the use of

derivative instruments including by selling market index futures contracts.

The Fund will borrow up to a maximum of 35% of its net assets, of which up

to a maximum of 30% will be used for additional investment in its long

portfolio, and up to a maximum of 5% will be used as margin in connection

with the Fund’s hedging strategy.


The Purpose Multi-Strategy Market Neutral Fund seeks to provide unitholders

with positive absolute returns that are not correlated to the broader securities

markets. The Fund will utilize a multi-strategy approach by allocating its assets

across various asset classes including equities, currencies and commodities.

Purpose Alternative Yield Fund

The Purpose Alternative Yield Fund seeks to provide unitholders with (a) high

monthly income and (b) long-term capital appreciation. The Fund will achieve

its investment objectives by investing in various asset classes including, but

not limited to, equities, fixed income securities, currencies and commodities.


The Purpose Alternative Strategies Fund seeks to provide unitholders with

long-term positive absolute returns in all market conditions while targeting (a)

volatility not higher than the broad equity markets and (b) low correlation to

the broad equity and fixed income securities markets. The Fund will utilize a

multi-strategy approach by allocating its assets across various asset classes

including equities, fixed income securities, currencies and commodities.

See “Investment Objectives”.

Investment

Strategies:

The investment strategy of each Fund is to invest in and hold a portfolio of

securities selected by the Investment Advisor in order to achieve its investment

objectives as described below. The Funds may also hold cash and cash

11

equivalents or other money market instruments in order to meet their current

obligations.


The Fund uses various asset classes to provide positive correlation to inflation

including: precious metals and related equities; industrial, energy and

agricultural commodities and related equities; real estate investment trusts

(REITs); emerging market (EM) currencies; real return bonds and treasury

inflation-protected securities (TIPS); and cash. The portfolio will be tactically

rebalanced on a quarterly basis with a risk-parity based asset allocation strategy

to maximize returns while reducing risk. “Risk-parity” is a core risk-focused

asset allocation strategy targeting equal volatility contributions by asset classes

held in the portfolio. By combining these potential benefits, the strategy can

serve as a compelling, comprehensive investment for those seeking to not only

hedge inflation, but also potentially benefit from trends and changes in

inflation.

The Investment Advisor may, in its discretion, change the frequency with

which the portfolio is reconstituted and rebalanced. Generally, a substantial

portion of the foreign currency exposure within the portfolio will be hedged

back to the Canadian dollar by using derivatives including currency forward

contracts in the Investment Advisor’s discretion.

The Fund will employ commodity futures but will not employ leverage.


The Purpose Enhanced US Equity Fund uses a multi-factor, fundamental rules-

based portfolio selection strategy to select portfolio securities from a universe

of North American equities. The selection strategy will emphasize factors that

have shown to be effective at differentiating between strong and weak

performing stocks including: fundamental change, valuation, growth and

quality. The Fund will utilize leverage to achieve market exposure to the long

portfolio targeted at 130% of the NAV of the Fund and may borrow up to 35%

of the Fund’s NAV to implement its investment strategies.

The Fund will hedge up to 30% of the portfolio’s market exposure in order to

reduce overall market risk associated with the leveraged portion of the

portfolio investments such that the net market exposure of the Fund will

generally be targeted at 100% of the NAV of the Fund.

As a result, over time, it is expected that for every $100 invested, the portfolio

will be constructed as $130 in long equity security positions and $30 in short

market index risk, resulting in a portfolio that generally has 100% net equity

market exposure.

The investment strategy is intended to enable the Fund to take advantage of the

expected value (or alpha) associated with the Fund’s individual portfolio

investments while maintaining a level of risk similar to the overall market. The

hedging strategy is implemented through the use of derivative instruments in

12

compliance with NI 81-102 including by selling market index futures

contracts.

The portfolio holdings are reconstituted and rebalanced monthly. The

Investment Advisor may, in its discretion, change the frequency with which

the portfolio is reconstituted and rebalanced. With respect to the Mutual Fund

Shares and ETF Shares (other than the ETF Non-Currency Hedged Shares and

Non-Currency Hedged Mutual Fund Shares (as defined herein)) generally, a

substantial portion of the foreign currency exposure within the portfolio will

be hedged back to the Canadian dollar by using derivatives including currency

forward contracts in the Investment Advisor’s discretion. With respect to the

ETF Non-Currency Hedged Shares and Non-Currency Hedged Mutual Fund

Shares, the foreign currency exposure of the portfolio will not be hedged back

to the Canadian dollar.


The Purpose Multi-Strategy Market Neutral Fund seeks to achieve its

investment objectives by investing in long and short positions across multiple

asset classes, which may include, but are not limited to, equity securities, fixed

income securities, commodities and currencies. Positions are chosen by the

Investment Advisor based on an analysis of technical trends and fundamental

outperformance factors that are tailored to each asset class. The Fund’s

investment strategy is designed to provide market-neutral returns that are non-

correlated to the broader equity and fixed income markets.

Utilizing a well-diversified portfolio of instruments, the Fund seeks exposure

to the following strategies:

Equities

The Fund’s equity positions are comprised of long and short positions chosen

using a multi-factor, fundamental rules-based portfolio selection strategy to

select portfolio securities from a universe of global equities that emphasizes

factors that have shown to be effective at differentiating between strong and

weak performing stocks including: fundamental change, valuation, growth and

quality. The Investment Advisor will tactically hedge the market exposure of

the Fund’s equity portfolio such that the Fund’s equity net market exposure

will range between 0% and 50% of the Fund’s NAV. This hedging is intended

to enable the equity portfolio to take advantage of the expected value (or alpha)

associated with the Fund’s individual portfolio investments but with reduced

risk that is associated with the overall market (or beta). Tactical hedging is

implemented through the use of derivative instruments in compliance with NI

81-102 including by selling market index futures contracts.

Fixed Income

The Fund’s fixed income positions will be designed to capture non-traditional

returns from global fixed income markets. The Fund may take long and short

positions based on quantitative, rules-based scoring methodologies that reflect

both technical trends and long-term outperformance factors that are expected

13

to include, but are not limited to, interest rate differentials and price

movements. The universe of the Fund’s fixed income securities may include,

but is not limited to, government debt, investment grade corporate debt, notes

and high yield debt instruments. The Fund may invest in (i) derivatives such

as options, futures contracts, forward contracts, swaps and credit derivatives

and/or (ii) underlying funds, in each case as permitted by Canadian securities

legislation, to hedge market exposure, to protect capital, to generate income,

hedge against losses from changes in the prices of the Fund’s investments and

from exposure to foreign currencies and/or as a substitute for direct investment.

The Investment Advisor may, in its discretion, add or remove countries from

the universe at any time without notice.

Commodities

The Fund’s commodity positions are designed to capture non-traditional

returns from the broad commodity market. The Fund will obtain long and short



to include, but are not limited to, term structure risk premiums. Term structure

is the price difference between futures contracts with different maturity dates.

Term structure risk premium refers to the expected outperformance of

commodities with downward sloping term structures (or commodities with

positive roll-yields) over commodities with upward sloping term structures (or

commodities with negative roll-yields). The universe of commodities includes

futures, ETFs and options on futures or ETFs linked to energy commodities,

precious and base metals and agricultural commodities including grains and

oilseeds, softs and livestock. The Investment Advisor may, in its discretion,

add or remove commodities which the Fund obtains exposure to at any time

without notice.

Currencies

The Fund’s currency positions are designed to capture non-traditional returns

from global currency markets. The Fund will take long and short positions

based on quantitative, rules-based scoring methodologies that reflect both

technical trends and long-term outperformance factors that are expected to

include, but are not limited to, interest rate differentials. The universe of

currencies covers developed and emerging countries which may include the

Australian Dollar, Brazilian Real, Canadian Dollar, Chilean Peso,

Czechoslovakian Krona, European Union Euro, British Pound, Hungarian

Forint, Indonesian Rupiah, Japanese Yen, Korean Won, Mexican Peso,

Malaysian Ringgit, Norwegian Krone, New Zealand Dollar, Polish Zloty,

Swedish Krona, Singaporean Dollar, Thai Baht, Turkish Lira, Taiwan Dollar,

South African Rand and United States Dollar. The Investment Advisor may,

in its discretion, add or remove countries from the universe at any time without

notice.

The Fund is diversified at both the asset class and individual security levels in

order to manage risk. In addition, offsetting long and short positions, or hedges,

used to manage the risk of adverse directional market moves. The Investment

14

Advisor also believes that the use of technical momentum factors provides

effective downside risk management.

The Fund provides exposure to several absolute return strategies through one

fund offering. The Investment Advisor may use additional investment

strategies in the future in order to meet the Fund’s investment objectives. The

portfolio holdings are reconstituted and rebalanced at the discretion of the

Investment Advisor. Generally, a substantial portion of the foreign currency

exposure within the portfolio will be hedged back to the Canadian dollar by

using derivatives including currency forward contracts in the Investment

Advisor’s discretion.


The Purpose Alternative Yield Fund seeks to achieve its investment objectives

by using primarily rules-based portfolio selection strategies to invest in

securities of various asset classes which may include, but are not limited to,

equity securities, fixed income securities, commodities, currencies and cash in

order to create value, generate income and reduce risk over the investment

period. The Fund may invest up to 100% of its assets in foreign securities.

The Fund may (a) write cash-covered put options in respect of individual

securities in order to receive premium income, reduce overall portfolio

volatility and reduce the net cost of acquiring the securities subject to put

options, (b) write covered call options on individual securities to seek to

receive premium income, reduce overall portfolio volatility and enhance the

portfolio’s total return, (c) invest in or use warrants, ETFs and derivatives such

as options, forward contracts, futures contracts and swaps for both hedging and

non-hedging purposes to generate income, hedge against losses from changes

in the prices of the Fund’s investments and from exposure to foreign currencies

and/or gain exposure to individual securities and markets instead of buying the

securities directly or (d) hold cash or fixed income securities for strategic

reasons or to provide cover for the writing of cash-covered put options in

respect of securities in which the Fund is permitted to invest. Such options in

respect of (a) and (b) above may be either exchange-traded or over-the-counter

options. The Fund is exposed to securities traded in foreign currencies and

may, in the Investment Advisor’s discretion, enter into currency hedging

transactions (including currency forward contracts) to reduce the effects of

changes in the value of foreign currencies relative to the value of the Canadian

dollar.

The portfolio holdings are reconstituted and rebalanced monthly. The

Investment Advisor may, in its discretion, change the frequency with which

the portfolio is reconstituted and rebalanced.


The Purpose Alternative Strategies Fund seeks to achieve its investment

objectives by investing in long and short positions across multiple asset

classes, which may include, but are not limited to, equity securities, fixed

income securities, commodities and currencies in compliance with Canadian

15

securities legislation. Positions are chosen by the Investment Advisor based on

an analysis of technical trends and fundamental outperformance factors that

are tailored to each asset class. The Fund’s investment strategy is designed to

provide market-neutral returns that are non-correlated to the broader equity and

fixed income markets.

Utilizing a well-diversified portfolio of instruments, the Fund seeks exposure

to the following strategies:

Equities

The Fund’s equity positions will be comprised of long and short positions

chosen using a multi-factor, fundamental rules-based portfolio selection

strategy to select portfolio securities from a universe of global equity securities

that emphasizes factors that have shown to be effective at differentiating

between strong and weak performing stocks including: fundamental change,

valuation, growth and quality. The Fund may also use technical trend factors

as part of its equity security selection process. The Investment Advisor may,

in its sole discretion hedge the market exposure of the Fund’s equity portfolio

to enable the equity portfolio to take advantage of the expected value (or alpha)

associated with the Fund’s individual portfolio investments but with reduced

risk that is associated with the overall market (or beta). Tactical hedging will

be implemented through the use of derivative instruments in compliance with

NI 81-102 including by, but not limited to, selling market index futures

contracts, selling put options and selling call options.

Fixed Income

The Fund’s fixed income positions will be designed to capture non-traditional

returns from global fixed income markets. The Fund may take long and short




movements. The universe of the Fund’s fixed income securities may include,

but is not limited to, government debt, investment grade corporate debt, notes

and high yield debt instruments. The Fund may invest in (i) derivatives such

as options, futures contracts, forward contracts, swaps and credit derivatives

and/or (ii) underlying funds, in each case as permitted by Canadian securities




The Investment Advisor may, in its discretion, add or remove countries from

the universe at any time without notice.

Commodities

The Fund’s commodity positions will be designed to capture non-traditional

returns from the broad commodity market. The Fund will obtain long and short



to include, but are not limited to, term structure risk premiums. Term structure

16

is the price difference between futures contracts with different maturity dates.

Term structure risk premium refers to the expected outperformance of

commodities with downward sloping term structures (or commodities with

positive roll-yields) over commodities with upward sloping term structures (or

commodities with negative roll-yields). The universe of commodities will

include, but is not limited to, futures, ETFs and options on futures or ETFs

linked to energy commodities, precious and base metals, and agricultural

commodities including grains and oilseeds, softs and livestock. The Investment

Advisor may, in its discretion, add or remove commodities to which the Fund

obtains exposure to at any time without notice.

Currencies

The Fund’s currency positions will be designed to capture non-traditional

returns from global currency markets. The Fund will take long and short




movements. The universe of currencies covers developed and emerging

countries which may include the Australian Dollar, Brazilian Real, Canadian

Dollar, Chilean Peso, Czechoslovakian Krona, European Union Euro, British

Pound, Hungarian Forint, Indonesian Rupiah, Japanese Yen, Korean Won,

Mexican Peso, Malaysian Ringgit, Norwegian Krone, New Zealand Dollar,

Polish Zloty, Swedish Krona, Singaporean Dollar, Thai Baht, Turkish Lira,

Taiwan Dollar, South African Rand and United States Dollar. The Investment

Advisor may, in its discretion, add or remove countries from the universe at

any time without notice.

Derivatives Strategies

The Fund will employ derivative instruments across various asset classes in

compliance with Canadian securities legislation including options, futures

contracts, warrants, forward contracts and swaps to enhance portfolio income,

offer long-term capital appreciation and preserve capital. The Fund may (a)

write cash-covered put options in respect of individual securities in order to

receive premium income, reduce overall portfolio volatility and reduce the net

cost of acquiring the securities subject to put options or (b) write covered call

options on individual securities to seek to receive premium income, reduce

overall portfolio volatility and enhance the portfolio’s total return. The Fund

may also hold cash or fixed income securities for strategic reasons or to provide

cover for the writing of cash-covered put options in respect of securities in

which the Fund is permitted to invest. Such options may be either exchange-

traded or over-the-counter options.

The Fund may invest in or use (a) warrants, ETFs and derivatives such as

options, forward contracts, futures contracts and swaps for both hedging and

non-hedging purposes to generate income, as permitted by Canadian securities




The Fund is exposed to securities traded in foreign currencies and may in the

17

Investment Advisor’s discretion, enter into currency hedging transactions

(including currency forward contracts) to reduce the effects of changes in the

value of foreign currencies relative to the value of the Canadian dollar.

The Fund is diversified at both the asset class and individual security levels in

order to manage risk. In addition, offsetting long and short positions, or hedges,

are used to manage the risk of adverse directional market moves. The

Investment Advisor also believes that the use of technical momentum factors

provides effective downside risk management.

The portfolio holdings are reconstituted and rebalanced in the sole discretion

of the Investment Advisor.

* * *

Each Fund may invest in or use derivative instruments and may engage in

securities lending transactions in order to earn additional income for the Fund,

provided that the use of such derivative instruments and such securities lending

transactions is in compliance with applicable Canadian securities legislation

and is consistent with the investment objectives and investment strategies of

the Fund. In accordance with applicable Canadian securities legislation,

including NI 81-102, and as an alternative to or in conjunction with investing

in and holding the Constituent Securities, a Fund may also invest in Other

Securities (as defined herein) in a manner that is consistent with its investment

objectives and investment strategies, provided that there shall be no duplication

of management fees chargeable in connection with Constituent Securities held

indirectly by the Fund through investments in other investment funds.

See “Investment Strategies”.

Special

Considerations for

Purchasers:

The provisions of the “early warning” requirements set out in Canadian

securities legislation do not apply in connection with the acquisition of ETF

Shares or ETF Units, as the case may be. The Funds have obtained exemptive

relief from the securities regulatory authorities to permit securityholders to

acquire more than 20% of the ETF Shares or ETF Units, as the case may be,

of any Fund through purchases on a stock exchange without regard to the take-

over bid requirements of Canadian securities legislation, provided that any

such securityholder, and any person acting jointly or in concert with the

securityholder, undertakes to the Manager not to vote more than 20% of the

ETF Shares or ETF Units, as the case may be, of the Fund at any meeting of

securityholders.

Dividend/Distribution

Policy:

PFC Funds

The dividend policy of the Company is to pay cash dividends on the shares of

the PFC Funds on an annual basis, if any, and in addition, to pay a special year-

end dividend where the Company has net taxable capital gains upon which it

would otherwise be subject to tax or where the Company needs to pay a

dividend in order to recover refundable tax not otherwise recoverable upon

payment of such cash dividends.

18

While the principal sources of income of the Company are expected to include

taxable capital gains as well as dividends from taxable Canadian corporations,

to the extent that the Company earns net income, after expenses, from other

sources, including dividends from non-Canadian sources and interest income

on interim investment of its reserves, the Company will be subject to income

tax on such income and no refund of such tax will be available if available

expenses are not enough to offset income.

Purpose Trust Funds

The distribution policy of the Purpose Multi-Strategy Market Neutral Fund and

the Purpose Alternative Strategies Fund is to pay cash distributions on units of

each Fund on an annual basis, if any. The distribution policy of the Purpose

Alternative Yield Fund is to pay cash distributions on units of the Fund on a

monthly basis, if any.

Dividend/Distribution

Reinvestment Plan:

The Funds will provide securityholders with the opportunity to reinvest cash

dividends or distributions in additional shares or units, as the case may be, of

the same series or class of the same Fund, respectively, through participation

in a dividend or distribution reinvestment plan, as applicable. See

“Dividend/Distribution Policy – Dividend/Distribution Reinvestment Plan”.

Switching ETF

Shares:

ETF Shareholders may switch (a “Switch”) ETF Shares of one Purpose

Corporate Fund to ETF Shares of another Purpose Corporate Fund through the

facilities of CDS (as defined herein) by contacting their financial advisor,

investment advisor or broker. Initially, ETF Shares may be switched in any

week on Wednesday (or if such Wednesday is not a Business Day, the next

Business Day) (“ETF Switch Date”) of such week (or more frequently as may

be determined by the Manager) by delivering written notice to the Purpose

Corporate Fund and surrendering such ETF Shares by 4:00 p.m. (Toronto time)

at least one Business Day prior to the ETF Switch Date (“Switch Notice

Date”). The Manager may, in its discretion, change the frequency with which

ETF Shares may be switched at any time without notice. See “Redemption,

Exchange and Switches of Securities – Switching Shares”.

Pursuant to the Switch Fund Rules (as defined herein), the switch by a

shareholder from one class of ETF Shares of the Company into ETF Shares of

another class of the Company will result in a disposition of such shares at fair

market value and a capital gain or a capital loss will generally be realized. See

“Income Tax Considerations – PFC Funds – Taxation of Shareholders”.

Switching Mutual

Fund Shares:

A holder of Mutual Fund Shares (other than Series XA Shares and Series XF

Shares) may switch such Mutual Fund Shares of one Purpose Corporate Fund

to Mutual Fund Shares (other than Series XA Shares and Series XF Shares) of

another Purpose Corporate Fund on any Business Day through its dealer.

Holders of Mutual Fund Shares should contact their financial advisor,

investment advisor or broker for more details. Holders of Series XA Shares

and Series XF Shares of one Purpose Corporate Fund may switch such shares

to Series XA Shares and Series XF Shares, respectively, of another Purpose

Corporate Fund. For greater certainty, Series XA Shares and Series XF Shares

may not be switched for Series A Shares, Series F Shares, Series I Shares or

19

Series D Shares and vice versa. Purpose may, in its discretion, change the

frequency with which shares may be switched at any time without notice.

No Switching of

Units:

Unitholders may not switch ETF Units or Mutual Fund Units of a Purpose

Trust Fund for ETF Shares or Mutual Fund Shares of any Purpose Corporate

Fund and a holder of ETF Shares or Mutual Fund Shares of a Purpose

Corporate Fund may not switch its ETF Shares or Mutual Fund Shares of a

Purpose Corporate Fund for ETF Units or Mutual Fund Units of a Purpose

Trust Fund. Holders of Mutual Fund Units of a Purpose Trust Fund may

convert units of any class into units of any other class of the Fund.

Exchanges and

Redemptions:

Holders of ETF Shares or ETF Units may redeem ETF Shares or ETF Units,

as applicable, for cash, subject to a redemption discount. Holders of ETF

Shares or ETF Units may also exchange a Prescribed Number of Securities (as

defined herein) (or integral multiple thereof) for Baskets of Securities (as

defined herein) and cash. See “Redemption, Exchange and Switches of

Securities – Redemption of ETF Shares/ETF Units for Cash” and

“Redemption, Exchange and Switches of Securities – Exchange of ETF

Shares/ETF Units for Baskets of Securities”.

Termination of the

Funds:

PFC Funds

The PFC Funds do not have a fixed termination date but may be terminated by

the Manager upon not less than 60 days’ written notice to shareholders. See

“Termination of the Funds”.

Purpose Trust Funds

A Purpose Trust Fund may be terminated by the Manager on at least 60 days’

notice to unitholders of such termination and the Manager will issue a press

release in advance thereof. Upon termination of a Purpose Trust Fund, the

Constituent Securities, Other Securities, cash and other assets remaining after

paying or providing for all liabilities and obligations of the Fund shall be

distributed pro rata among the unitholders of the Fund.

Eligibility for

Investment:

It is intended that the shares and units of the Funds will at all relevant times be

qualified investments for trusts governed by Registered Plans (as defined

herein).

Holders of tax-free savings accounts (“TFSAs”) and registered disability

savings plans (“RDSPs”), subscribers of registered education savings plans

(“RESPs”) and annuitants of registered retirement savings plans (“RRSPs”)

and registered retirement income funds (“RRIFs”), should consult with their

tax advisors as to whether shares or units, as the case may be, would be a

prohibited investment for such accounts or plans in their particular

circumstances. See “Eligibility for Investment”.

Risk Factors: There are certain general risks inherent in an investment in shares or units of

the Funds, including:

(a) Fluctuations in NAV and NAV per Share/Unit;

20

(b) Risk of Loss;

(c) Exchange Rate Risk;

(d) Tax Risk;

(e) Changes in Legislation;

(f) Use of Derivative Instruments;

(g) Use of Leverage;

(h) Securities Lending;

(i) Currency Risk;

(j) Cyber Security Risk;

(k) General Risks of Debt Instruments;

(l) Rebalancing and Adjustment Risk;

(m) Cease Trading of Constituent Securities;

(n) Illiquid Securities;

(o) Reliance on Key Personnel;

(p) Absence of an Active Market for the ETF Shares/ETF Units;

(q) Equity Investment Risk;

(r) Asset Class Risk;

(s) Collateral Risk;

(t) Credit Risk;

(u) Distributions In Specie;

(v) Interest Rate Risk;

(w) Foreign Investment Risk;

(x) Counterparty Risk; and

(y) Trading Price of ETF Shares/ETF Units.

See “Risk Factors”.

In addition to the general risk factors applicable to all of the Funds set forth

above, there are certain additional specific risk factors inherent in an

investment in certain Funds, as indicated in the table below:

21

Risk Factors

Pu

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se D

iver

sifi

ed

Rea

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Fu

nd

Pu

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nh

an

ced

US

Eq

uit

y F

un

d

Pu

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se M

ult

i-

Str

ate

gy

Ma

rket

Neu

tra

l F

un

d

Pu

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se A

lter

na

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e

Yie

ld F

un

d

Pu

rpo

se A

lter

na

tiv

e

Str

ate

gie

s F

un

d

Agriculture and Farming Industry Risk √ √ √ √

Capital Depreciation Risk √

Commodities Exchange Regulatory Risk √ √ √ √

Commodity Risk √ √ √ √

Debt Securities Risk √

Energy Risk √ √ √ √

Fund Corporation Risk √ √

Futures Contract Margin Risk √ √ √ √

Futures Contract Liquidity Risk √ √ √ √

Foreign Markets Risk √ √ √ √

Lack of Operating History √ √

Precious Metals Risk √ √ √ √

See “Risk Factors – Additional Risks Relating to an Investment in Certain Funds”.

Income Tax

Considerations:

PFC Funds

This summary of Canadian tax considerations for the PFC Funds and for Canadian

resident shareholders is subject in its entirety to the qualifications, limitations and

assumptions set out under “Income Tax Considerations”.

A holder of shares of a PFC Fund who is resident in Canada for purposes of the Tax

Act will be required to include in his or her income the amount of any dividends paid

on such shares, other than capital gains dividends, whether received in cash or

reinvested in additional shares. The dividend gross-up and tax credit treatment

normally applicable to taxable dividends (including eligible dividends) paid by a

taxable Canadian corporation will apply to such dividends. Capital gains dividends

will be paid by the Company to holders of shares of a PFC Fund out of the capital

gains realized by the Company. The amount of a capital gains dividend will be treated

as a capital gain in the hands of the holder of such shares. If the Company pays a

return of capital, such amount will generally not be taxable but will reduce the

adjusted cost base of the holder’s shares of the PFC Fund in respect of which the

return of capital amount was paid. Where such reductions would result in the adjusted

cost base becoming a negative amount, that amount will be treated as a capital gain

realized by the holder of the shares and the adjusted cost base of the shares will be

nil immediately thereafter.

Each investor should satisfy himself or herself as to the tax consequences of an

investment in shares of the PFC Funds by obtaining advice from his or her own tax

advisor.

See “Income Tax Considerations – PFC Funds”.

22

Purpose Trust Funds

This summary of Canadian tax considerations for the Purpose Trust Funds and for

Canadian resident unitholders is subject in its entirety to the qualifications, limitations

and assumptions set out under “Income Tax Considerations”.

A unitholder who is resident in Canada for the purposes of the Tax Act will generally

be required to include in the unitholder’s income for tax purposes for any year the

Canadian dollar amount of net income and net taxable capital gains of the Fund paid

or payable to the unitholder in the year and deducted by a Fund in computing its

income. Any non-taxable distributions from a Fund (other than the non-taxable

portion of any net realized capital gains of the Fund) paid or payable to a unitholder

in a taxation year, such as a return of capital, will reduce the adjusted cost base of the

unitholder’s units. To the extent that a unitholder’s adjusted cost base would

otherwise be a negative amount, the negative amount will be deemed to be a capital

gain realized by the unitholder and the adjusted cost base of the unit to the unitholder

will be nil immediately thereafter. Any loss realized by a Fund cannot be allocated

to, and cannot be treated as a loss of, the unitholders of the Fund. Upon the actual or

deemed disposition of a unit held by the unitholder as capital property, including the

exchange or redemption of a unit, a capital gain (or a capital loss) will generally be

realized by the unitholder to the extent that the proceeds of disposition of the unit

exceed (or are less than) the aggregate of the adjusted cost base to the unitholder of

the unit and any reasonable costs of disposition.

The Declaration of Trust governing the Purpose Trust Funds requires that a Fund

distribute its net income and net realized capital gains, if any, for each taxation year

to unitholders to such an extent that the Fund will not be liable in any taxation year

for ordinary income tax.

Each investor should satisfy himself or herself as to the tax consequences of an

investment in units of a Purpose Trust Fund by obtaining advice from his or her own

tax advisor.

See “Income Tax Considerations – Purpose Trust Funds”.

Organization and Management Details of the Funds

Manager: Purpose is the manager and portfolio manager of the Funds. The address of the

Manager is 130 Adelaide Street West, Suite 1700, Toronto, Ontario, M5H 3P5.

See “Organization and Management Details of the Funds”.

Investment

Advisor:

Neuberger Berman Breton Hill ULC (“NBBH” or the “Investment Advisor”) is the

investment sub-advisor and provides investment advisory services to the Funds. The

Investment Advisor is located in Toronto, Ontario. The Investment Advisor has an

equity interest in Purpose.

See “The Investment Advisor”.

23

Promoter: The Manager may be considered a promoter of the Funds within the meaning of the

securities legislation of certain Provinces and Territories of Canada by reason of its

initiative in organizing the Funds. The Promoter is located in Toronto, Ontario.

See “Organization and Management Details of the Funds”.

Custodian: CIBC Mellon Trust Company is the custodian of the assets of the Funds pursuant to,

in the case of the Purpose Trust Funds, the PTF Custodian Agreement and in the case

of the PFC Funds, the PFC Custodian Agreement. The Custodian is located in

Toronto, Ontario. The address of the Custodian is 320 Bay Street, P.O. Box 1, 6th

Floor, Toronto, Ontario, M5H 4A6.

See “Organization and Management Details of the Funds – Custodian and Securities

Lending Agent”.

Securities

Lending Agent:

CIBC Mellon Trust Company is the securities lending agent and acts on behalf of the

Funds in administering the securities lending transactions entered into by the Funds.

See “Organization and Management Details of the Funds – Custodian and Securities

Lending Agent”.

Registrar and

Transfer Agent

of the ETF

Shares and

ETF Units:

TSX Trust Company, at its principal offices in Toronto, Ontario, is the registrar and

transfer agent for the ETF Shares and the ETF Units of the Funds. The register for

the Funds is kept in Toronto.

See “Organization and Management Details of the Funds – Registrar and Transfer

Agent and Plan Agent – ETF Shares/ETF Units”.

Registrar and

Transfer Agent

of the Mutual

Fund Shares

and Mutual

Fund Units:

CIBC Mellon Global Securities Services Company, at its principal office in Toronto,

Ontario, is the registrar and transfer agent for the Mutual Fund Shares and the Mutual

Fund Units. The register for the Funds is kept in Toronto.

See “Organization and Management Details of the Funds – Registrar and Transfer

Agent and Plan Agent – Registrar and Transfer Agent of the Mutual Fund Shares and

Mutual Fund Units”.

Plan Agent for

the ETF Shares

and ETF Units:

TSX Trust Company, at its principal offices in Toronto, Ontario, is the Plan Agent

for the ETF Shares and ETF Units of the Funds.

See “Organization and Management Details of the Funds – Plan Agent”.

Auditor: Ernst & Young LLP, Chartered Professional Accountants, Licensed Public

Accountants, at its principal offices in Toronto, Ontario, is the auditor of the

Company and the Funds.

See “Organization and Management Details of the Funds – Auditor”.

24

SUMMARY OF FEES AND EXPENSES

This table lists the fees and expenses that you may have to pay if you invest in the Funds. You may have to

pay some of these fees and expenses directly. The Funds may have to pay some of these fees and expenses,

which will therefore reduce the value of your investment in the Funds. For further particulars, see “Fees

and Expenses”.

Fees and Expenses Payable by the Funds

Management

Fees:


Each Fund will pay the Manager a management fee as set forth in the table below

based on the average daily NAV of the ETF Shares and the ETF Units, as the case may

be, of the Fund. The management fee, plus applicable HST, is calculated and accrued

daily and paid monthly in arrears. The Manager may, from time to time in its

discretion, waive all or a portion of the management fee charged at any given time.

Fund Annual Management

Fee (%)

Purpose Diversified Real Asset Fund 0.60%

Purpose Enhanced US Equity Fund 0.80%

Purpose Multi-Strategy Market Neutral Fund 0.95%

Purpose Alternative Yield Fund 0.75%

Purpose Alternative Strategies Fund 0.95%

Mutual Fund Shares/Mutual Fund Units

Each Fund will pay the Manager a management fee as set forth in the table below

based on the average daily NAV of the applicable series or class of the Fund, as the

case may be. The management fee, plus applicable HST, is calculated and accrued

daily and paid monthly in arrears. The Manager may, from time to time in its


Fund Series/Class Annual Management Fee (%)

Purpose Diversified

Real Asset Fund

A 1.60% (including a service fee of 1.00% as

described below)

F 0.60%

I negotiated management fee paid directly to

Purpose, which will not exceed 0.60%

D 0.85% (including a service fee of 0.25% as

described below)

XA 1.60% (including a service fee of 1.00% as

described below)

XF 0.60%

25


Purpose Enhanced

US Equity Fund


described below)

F 0.80%




described below)

XA 1.80% (including a service fee of 1.00% as

described below)

XF 0.80%

Purpose Multi-

Strategy Market

Neutral Fund


described below)

F 0.95%


described below)



Purpose Alternative

Yield Fund


described below)

F 0.75%


described below)

Purpose Alternative

Strategies Fund


described below)

F 0.95%


described below)

In addition, holders of Series XA Shares and Series XF Shares pay an additional fee

of up to 0.65% per annum based on the value of the securities vended in and held by

26

the Company, plus an amount in respect of hedging costs (based on then current

market rates) incurred in connection with all such holdings, on a pro rata basis.

Trailing

Commission:

The Manager will pay a service fee, also known as a “trailing commission”, to the

dealer of each holder of Series A Shares, Series D Shares, Series XA Shares, Class A

Units or Class D Units, as the case may be, quarterly for ongoing services that the

dealer may provide to the holder of Series A Shares, Series D Shares, Series XA

Shares, Class A Units or Class D Units, as applicable, for so long as the holder

continues to hold Series A Shares, Series D Shares, Series XA Shares, Class A Units

or Class D Units, as applicable. The service fee will be paid by the Fund to the

Manager. The Manager will in turn remit the service fee to the dealers. The service

fee for Series A Shares, Series XA Shares and Class A Units is equal to 1.00% per

annum of the average daily NAV per Series A Share, Series XA Share or Class A

Unit of the Fund, as the case may be, held, plus applicable HST. The service fee for

Series D Shares and Class D Units is equal to 0.25% per annum of the average daily

NAV per Series D Share or Class D Unit of the Fund, as the case may be, held, plus

applicable HST. No service fee is payable on the ETF Shares, ETF Units, Mutual

Fund Shares (other than Series A Shares, Series D Shares and Series XA Shares) or

Mutual Fund Units (other than Class A Units and Class D Units). The Manager may,

in its discretion, change the terms of the service fee including the manner and

frequency with which it is paid at any time.

See “Fees and Expenses – Fees and Expenses Payable by the Funds – Trailing

Commission”.

Operating

Expenses:

PFC Funds

The Manager has agreed to pay for certain operating and administrative expenses (the

“Corporate Administrative Expenses”) incurred by each PFC Fund in respect of

the ETF Shares, Series A Shares, Series F Shares, Series D Shares, Series XA Shares

and Series XF Shares which exceed 0.05% per annum of the NAV each of such series

of shares. This means each Fund pays only up to 0.05% per annum of the NAV of

each such series of shares of the Fund for Corporate Administrative Expenses, plus

the other costs and expenses referred to below. Corporate Administrative Expenses

include accounting, audit and legal fees, custodial fees, investor reporting costs for

annual and semi-annual financial statements, expenses in connection with the

preparation of prospectus and other regulatory reports, regulatory filing fees,

exchange listing fees (if applicable) and other operating and administrative expenses

incurred in connection with the day-to-day operation of the Fund. However,

Corporate Administrative Expenses do not include, and each Fund will be responsible

for paying (the “Corporate Additional Expenses”), the costs and expenses incurred

in complying with NI 81-107 (including any expenses related to the implementation

and on-going operation of an independent review committee), the costs and expenses

incurred in connection with the dividend reinvestment plan, portfolio transaction costs

including brokerage expenses and commissions and costs associated with the use of

derivatives (if applicable), transfer agency fees and expenses, income and

withholding taxes as well as all other applicable taxes, including HST, bank charges

and interest expenses, the costs of complying with any new governmental or

regulatory requirement introduced after the Fund was established and extraordinary

expenses including any costs associated with the printing and distribution of any

documents that the securities regulatory authorities require be sent or delivered to

27

investors in the Fund. The Corporate Administrative Expenses and Corporate

Additional Expenses payable by the Fund, plus applicable HST, will be calculated

and accrued daily and paid monthly in arrears.

In addition, holders of Series XA Shares and Series XF Shares pay an additional fee

of up to 0.65% per annum based on the value of the securities vended in and held by

the Company, plus an amount in respect of hedging costs (based on then current

market rates) incurred in connection with all such holdings, on a pro rata basis.

The Manager may, from time to time, in its sole discretion, pay all or a portion of any

Corporate Additional Expenses which would otherwise be payable by the Funds.

See “Fees and Expenses – Fees and Expenses Payable by the Funds – Negotiated

Management Fee” below for details regarding Series I Shares.

Purpose Trust Funds

The Manager has agreed to pay for certain operating and administrative expenses (the

“Trust Administrative Expenses”) incurred by each Purpose Trust Fund in respect

of the ETF Units, Class A Units, Class F Units and Class D Units which exceed 0.05%

per annum of the NAV of each class of units of the Fund. This means that each Fund

pays only up to 0.05% per annum of the NAV of each class of units of the Fund for

Trust Administrative Expenses, plus the other costs and expenses referred to below.

Trust Administrative Expenses include accounting, audit and legal fees, custodial

fees, investor reporting costs for annual and semi-annual financial statements,

expenses in connection with the preparation of prospectus and other regulatory

reports, regulatory filing fees, exchange listing fees (if applicable) and other operating

and administrative expenses incurred in connection with the day-to-day operation of

a Fund. However, Trust Administrative Expenses do not include, and each Fund will

be responsible for paying (the “Trust Additional Expenses”), the costs and expenses

incurred in complying with NI 81-107 (including any expenses related to the

implementation and on-going operation of an independent review committee), the

costs and expenses incurred in connection with the distribution reinvestment plan,

portfolio transaction costs including brokerage expenses and commissions and costs

associated with the use of derivatives (if applicable), transfer agency fees and

expenses, income and withholding taxes as well as all other applicable taxes,

including HST, bank charges and interest expenses, the costs of complying with any

new governmental or regulatory requirement introduced after the Fund was

established and extraordinary expenses including any costs associated with the

printing and distribution of any documents that the securities regulatory authorities

require be sent or delivered to investors in the Fund. The Trust Administrative

Expenses and Trust Additional Expenses payable by a Fund, plus applicable HST,

will be calculated and accrued daily and paid monthly in arrears.

The Manager may, from time to time, in its sole discretion, pay all or a portion of any

Trust Additional Expenses which would otherwise be payable by a Fund.

See “Fees and Expenses – Fees and Expenses Payable by the Funds – Negotiated

Management Fee” below for details regarding Class I Units, “Fees and Expenses –

28

Fees and Expenses Payable by the Funds – Operating Fees” and “Organization and

Management Details of the Funds – The Manager, Promoter and Trustee”.

Negotiated

Management

Fee:

Holders of Series I Shares and/or Class I Units pay a negotiated management fee

directly to the Manager, plus any additional amounts for administrative expenses up

to 0.05% per annum of the NAV of such series of shares and/or class of units and any

additional expenses as may be agreed to by the holder and the Manager. The

negotiated management fee may vary for each Fund and each investor in a Fund. See

the “Fees and Expenses – Fee and Expenses Payable by the Funds – Management

Fees – Mutual Fund Shares/Mutual Fund Units” for information on the maximum

percentage of the negotiated management fee which may be payable by an investor

in Series I Shares or Class I Units of the Funds.

Management

Fee Rebates:


To achieve effective and competitive management fees, the Manager may reduce the

management fee borne by certain holders of ETF Shares or ETF Units who have

signed an agreement with the Manager. The Manager will pay out the amount of the

reduction in the form of a management fee rebate directly to the eligible

securityholder. The decision to pay management fee rebates will be in the Manager’s

discretion and will depend on a number of factors, including the size of the investment

and a negotiated fee agreement between the securityholder and the Manager. The

Manager reserves the right to discontinue or change management fee rebates at any

time.


To achieve effective and competitive management fees, the Manager may reduce the

management fee borne by certain holders of Mutual Fund Shares or Mutual Fund

Units who have signed an agreement with the Manager. The Manager will reinvest

the amount of the reduction in additional Mutual Fund Shares or Mutual Fund Units,

as applicable, unless otherwise requested. The decision to pay management fee

rebates will be in the Manager’s discretion and will depend on a number of factors,

including the size of the investment and a negotiated fee agreement between the

securityholder and the Manager. The Manager reserves the right to discontinue or

change management fee rebates at any time.

See “Fees and Expenses – Fees and Expenses Payable by the Funds – Management

Fee Rebates”.

Fees and Expenses Payable Directly by Securityholders

Short-term

Trading Fees:


At the present time, the Manager is of the view that it is not necessary to impose any

short-term trading restrictions on the ETF Shares or ETF Units.

Mutual Fund Shares

If a holder of Mutual Fund Shares redeems or switches Mutual Fund Shares within 30

days of purchasing such Mutual Fund Shares, the Manager may charge a short-term

trading fee on behalf of the Fund of up to 2% of the value of such shares in

circumstances where it determines that the trading activity represents market timing or

29

excessive short-term trading. This charge is in addition to any switch fee that the

shareholder may pay. Each additional switch counts as a new purchase for this purpose.

No short-term trading fees are charged on redemptions made under a systematic

withdrawal plan or redemptions that may occur when an investor fails to meet the

minimum investment amount for the Fund.

Mutual Fund Units

If a holder of Mutual Fund Units redeems Mutual Fund Units within 30 days of

purchasing such Mutual Fund Units, the Manager may charge a short-term trading fee

on behalf of the Fund of up to 2% of the value of such units in circumstances where it

determines that the trading activity represents market timing or excessive short-term

trading. No short-term trading fees are charged on redemptions made under a

systematic withdrawal plan or redemptions that may occur when an investor fails to

meet the minimum investment amount for the Fund.

See “Fees and Expenses Payable Directly by Securityholders” and “Purchase of

Securities – Initial Investment”.

Negotiated

Management

Fee:

Holders of Series I Shares/Class I Units will pay a negotiated management fee directly

to the Manager. See “Fees and Expenses – Fees and Expenses Payable by the Funds –

Negotiated Management Fee”.

Annual

Returns,

Management

Expense Ratio

and Trading

Expense Ratio:

The following chart provides the annual returns, the management expense ratio

(“MER”) and the trading expense ratio (“TER”) for the ETF Shares or ETF Units, as

applicable, of the Funds as disclosed in the Funds’ management reports of fund

performance from the date of its inception to December 31, 2017. This information is

not available for the New Purpose Funds because no ETF Units of the New Purpose

Funds had been issued as of December 31, 2017.

2017 2016 2015 2014

Purpose Diversified Real Asset

Fund – ETF shares

Annual

Returns (%) 4.7% 15.0% -13.40% -3.90%1

MER (%) 0.74% 0.72% 0.75% 0.77%1

TER (%) 0.12% 0.27% 0.28% 0.06%1

Purpose

Enhanced US Equity Fund – ETF

shares

Annual

Returns (%) 15.8% 21.5% -8.30% 7.00%

MER (%) 1.31% 1.18% 1.15% 1.13%

TER (%) 0.12% 0.12% 0.21% 0.26%

Purpose

Enhanced US Equity Fund – ETF

non-currency hedged shares

Annual

Returns (%) 10.1% 18.9% 6.40% 10.00%2

MER (%) 1.29% 1.16% 1.15% 1.13%2

TER (%) 0.11% 0.17% 0.36% 0.26%2

30

Purpose Multi-Strategy Market

Neutral Fund – ETF Units

Annual

Returns (%) 6.9% 3.6% 2.20% 3.00%3

MER (%) 1.06% 1.07% 1.09% 1.14%3

TER (%) 0.05% 0.06% 0.12% 0.19%3

Notes:

(1) For the period November 5, 2014 to December 31, 2014.

(2) For the period October 14, 2014 to December 31, 2014.


31

OVERVIEW OF THE LEGAL STRUCTURE OF THE FUNDS

PFC Funds

Purpose Fund Corp. (the “Company”) is a mutual fund corporation established under the laws of the

Province of Ontario. The authorized capital of the Company includes an unlimited number of classes of

non-cumulative, redeemable, non-voting shares and one class of voting common shares (the “Common

Shares”). The authorized capital of the Company includes an unlimited number of classes of non-

cumulative, redeemable, non-voting shares (each, a “Corporate Class”). Each Corporate Class is a separate

investment fund having specific investment objectives and is specifically referable to a separate portfolio

of investments. Each of the Purpose Diversified Real Asset Fund and the Purpose Enhanced US Equity

Fund is class of shares of the Company. Each such Corporate Class is divided into separate series of shares.

Each Corporate Class consists of one or more series of exchange-traded shares and one or more series of

Mutual Fund Shares (as defined herein). An unlimited number of ETF Shares (as defined herein) and

Mutual Fund Shares are authorized for issuance.

Purpose Trust Funds

Each Purpose Trust Fund is a mutual fund established as a trust under the laws of the Province of Ontario

pursuant to the Declaration of Trust (as defined herein). The authorized capital of each Purpose Trust Fund

includes one or more classes of exchange-traded units (each such class, “ETF Units”) and one or more

classes of Mutual Fund Units (as defined herein). An unlimited number of ETF Units and Mutual Fund

Units are authorized for issuance.

The Funds are offering the following shares or units, as the case may be:

Purpose Diversified Real Asset Fund1

Purpose Enhanced US Equity Fund2

Purpose Multi-Strategy Market Neutral Fund3

Purpose Alternative Yield Fund4 (formerly Purpose Diversified Premium Yield Fund)

Purpose Alternative Strategies Fund4

(1) ETF shares, Series A shares, Series F shares, Series I shares, Series D shares, Series XA shares and Series XF Shares.

(2) ETF shares and ETF non-currency hedged shares, Series A shares, Series A non-currency hedged shares, Series F shares, Series F non-currency hedged shares, Series I shares, Series I non-currency hedged shares, Series D shares, Series XA shares and Series XF shares.

(3) ETF units, Class A units, Class F units, Class I units and Class D units. (4) ETF units, Class A units, Class F units and Class D units.

* * *

The Funds are mutual funds but certain provisions of securities legislation designed to protect investors

who purchase securities of mutual funds do not apply to them. The shares and units of the Funds may only

be purchased by investors through registered brokers and dealers registered to sell securities of mutual funds

which are subject to National Instrument 81-104 – Commodity Pools in accordance with the requirements

of Part 4 of that Instrument. The Funds are subject to certain restrictions and practices contained in Canadian

securities legislation, including National Instrument 81-102 – Investment Funds (“NI 81-102”), and are

managed in accordance with these restrictions, except as otherwise permitted by National Instrument 81-

104 – Commodity Pools (“NI 81-104”) and subject to receipt of any exemptions therefrom obtained by the

Funds.

The currency exposure of the portion of the Purpose Enhanced US Equity Fund’s portfolio related to ETF

Non-Currency Hedged Shares and Non-Currency Hedged Mutual Fund Shares will not be hedged back to

the Canadian dollar. Accordingly, the NAV per share of each series of shares of the Purpose Enhanced US

32

Equity Fund will not be the same as a result of the currency exposure of the portion of the Fund’s portfolio

related to each such series of shares.

While the Funds are mutual funds under the securities legislation of certain Provinces and Territories of

Canada, they have been granted exemptive relief from certain provisions of Canadian securities legislation

applicable to conventional mutual funds. See “Exemptions and Approvals”.

The Funds are not index mutual funds and are managed in the discretion of the Manager in accordance with

their respective investment strategies and, as such, they are generally more active in nature than index

mutual funds.

The Toronto Stock Exchange (the “TSX”) has conditionally approved the listing of the ETF Units of the

Purpose Alternative Yield Fund and the Purpose Alternative Strategies Fund (collectively, the “New

Purpose Funds”) on the TSX. The listing of the ETF Units is subject to each New Purpose Fund fulfilling

all of the requirements of the TSX on or before July 26, 2019. Subject to satisfying the TSX’s original

listing requirements, the ETF Units of the New Purpose Funds will be listed on the TSX and offered on a

continuous basis, and an investor will be able to buy or sell such ETF Units on the TSX through registered

brokers and dealers in the Province or Territory where the investor resides.

The ETF Units and ETF shares and ETF non-currency hedged shares (collectively, the “ETF Shares”), as

applicable, of the Funds (other than the New Purpose Funds) are listed on the TSX and offered on a

continuous basis, and an investor may buy or sell ETF Units and ETF Shares of the Funds (other than the

New Purpose Funds) on the TSX through registered brokers and dealers in the Province or Territory where

the investor resides.

Investors will incur customary brokerage commissions in buying or selling the ETF Units and ETF Shares.

The TSX ticker symbol for (a) the ETF shares of the Purpose Diversified Real Asset Fund is “PRA”, (b)

the ETF shares of the Purpose Enhanced US Equity Fund is “PEU”, (c) the ETF Non-Currency Hedged

Shares of the Purpose Enhanced US Equity Fund is “PEU.B”, (d) the ETF Units of the Purpose Multi-

Strategy Market Neutral Fund is “PMM”, (e) the ETF Units of the Purpose Alternative Yield Fund is

“PDYF” and (f) the ETF Units of the Purpose Alternative Strategies Fund is “PALT”.


The Manager, on behalf of the Funds, has entered, or will enter, into agreements with registered dealers

(each a “Designated Broker” or “Dealer”), which amongst other things enables Designated Brokers and

Dealers to purchase and redeem ETF Shares or ETF Units, as the case may be, directly from the Funds.

Securityholders may redeem ETF Shares or ETF Units, as the case may be, for cash at a redemption price

of (a) (i) in respect of the ETF Shares, 95% of the closing price for the ETF Shares on the TSX and (ii) in

respect of the ETF Units, 95% of the market price of the ETF Units, on the effective date of redemption

and (b) the NAV per ETF Share or ETF Unit, as the case may be. “Market price” means the weighted

average trading price of the ETF Units on the Canadian marketplaces on which the ETF Units have traded

on the effective date of redemption. Securityholders may also exchange a Prescribed Number of Securities

(as defined herein) (or an integral multiple thereof) for cash and Baskets of Securities (as defined herein)

held by a Fund. The Funds will issue ETF Shares and ETF Units directly to Designated Brokers and Dealers.

The head office of the Funds and the Manager is located at 130 Adelaide Street West, Suite 1700, Toronto,

Ontario, M5H 3P5. The Manager is a corporation incorporated under the laws of the Province of Ontario.

Neuberger Berman Breton Hill ULC (formerly, Breton Hill Capital Ltd.) (the “Investment Advisor”) will

act as investment sub-advisor to the Funds. The fiscal year-end of the Company is December 31.

33

The following table sets out the full legal name as well as the TSX ticker symbol for the ETF Shares or

ETF Units, as applicable, of the Funds:

Legal name of the Fund TSX Ticker Symbol

Purpose Diversified Real Asset Fund (ETF shares) PRA

Purpose Enhanced US Equity Fund (ETF shares) PEU

Purpose Enhanced US Equity Fund (ETF Non-Currency Hedged

Shares)

PEU.B

Purpose Multi-Strategy Market Neutral Fund (ETF Units) PMM

Purpose Alternative Yield Fund (ETF Units) PDYF

Purpose Alternative Strategies Fund (ETF Units) PALT

On June 8, 2018, the Manager approved a proposal to merge the Purpose Diversified Real Asset Fund and

the Redwood Global Infrastructure Income Fund, with the Purpose Diversified Real Asset Fund being the

continuing fund (the “Proposal”). The Manager called and will hold a special meeting of shareholders of

the Purpose Diversified Real Asset Fund on August 16, 2018 to consider and vote upon the Proposal. A

management information circulating describing the Proposal will be mailed to shareholders of the Purpose

Diversified Real Asset Fund of record on July 3, 2018. If approved, the Proposal is expected to be

implemented on or about August 27, 2018.

INVESTMENT OBJECTIVES

Each of the Funds seeks to provide investors with a specified investment result, as outlined herein.


The Purpose Diversified Real Asset Fund seeks to provide shareholders with exposure to a diversified

portfolio of asset classes that are directly or indirectly linked to physical assets with positive correlation to

inflation and are expected to maintain their real (after inflation) value over time. These assets may include

precious metals and related equities; industrial, energy and agricultural commodities and related equities;

real estate investment trusts (REITs); emerging market (EM) currencies; real return bonds and treasury

inflation-protected securities (TIPS); and cash.


The Purpose Enhanced US Equity Fund seeks to provide shareholders with long-term capital appreciation

and a superior risk adjusted return relative to the broad U.S. equity markets. The Fund aims to provide

returns in excess of the broad U.S. equity markets by investing in a portfolio of U.S. listed equities while

maintaining a similar level of volatility as the broad U.S. equity markets. The Fund will employ leverage

to increase its long portfolio exposure and to hedge the increased market risk associated with the leveraged

portion of the portfolio. The Fund will implement its hedging strategy through the use of derivative

instruments including by selling market index futures contracts.

The Fund will borrow up to a maximum of 35% of its net assets, of which up to a maximum of 30% is used

for additional investment in its long portfolio, and up to a maximum of 5% is used as margin in connection

with the Fund’s hedging strategy.

34


The Purpose Multi-Strategy Market Neutral Fund seeks to provide unitholders with positive absolute

returns that are not correlated to the broader securities markets. The Fund will utilize a multi-strategy

approach by allocating its assets across various asset classes including equities, currencies and

commodities.


The Purpose Alternative Yield Fund seeks to provide unitholders with (a) high monthly income and (b)

long-term capital appreciation. The Fund will achieve its investment objectives by investing in various asset

classes including, but not limited to, equities, fixed income securities, currencies and commodities.


The Purpose Alternative Strategies Fund seeks to provide unitholders with long-term positive absolute

returns in all market conditions while targeting (a) volatility not higher than the broad equity markets and

(b) low correlation to the broad equity and fixed income securities markets. The Fund will utilize a multi-

strategy approach by allocating its assets across various asset classes including equities, fixed income

securities, currencies and commodities.

INVESTMENT STRATEGIES

The investment strategy of each Fund is to invest in and hold a portfolio of securities or assets selected by

the Manager or Investment Advisor in order to achieve its investment objectives. The Funds may also hold

cash and cash equivalents or other money market instruments to meet their current obligations.


The Purpose Diversified Real Asset Fund uses various asset classes to provide positive correlation to

inflation including: precious metals and related equities; industrial, energy and agricultural commodities

and related equities; real estate investment trusts (REITs); emerging market (EM) currencies; real return

bonds and treasury inflation-protected securities (TIPS); and cash. The portfolio will be tactically

rebalanced on a quarterly basis with a risk-parity based asset allocation strategy to maximize returns while

reducing risk. “Risk-parity” is a core risk-focused asset allocation strategy targeting equal volatility

contributions by asset classes held in the portfolio. By combining these potential benefits, the strategy can

serve as a compelling, comprehensive investment for those seeking to not only hedge inflation, but also

potentially benefit from trends and changes in inflation.

The Investment Advisor may, in its discretion, change the frequency with which the portfolio is

reconstituted and rebalanced. Generally, a substantial portion of the foreign currency exposure within the

portfolio will be hedged back to the Canadian dollar by using derivatives including currency forward

contracts in the Investment Advisor’s discretion.

The Fund will employ commodity futures but will not employ leverage.


The Purpose Enhanced US Equity Fund uses a multi-factor, fundamental rules-based portfolio selection

strategy to select portfolio securities from a universe of North American equities. The selection strategy

will emphasize factors that have shown to be effective at differentiating between strong and weak

35

performing stocks including: fundamental change, valuation, growth and quality. The Fund will utilize

leverage to achieve market exposure to the long portfolio targeted at 130% of the NAV of the Fund and

may borrow up to 35% of the Fund’s NAV to implement its investment strategies.

The Fund will hedge up to 30% of the portfolio’s market exposure in order to reduce overall market risk

associated with the leveraged portion of the portfolio investments such that the net market exposure of the

Fund will generally be targeted at 100% of the NAV of the Fund.

As a result, over time, it is expected that for every $100 invested, the portfolio will be constructed as $130

in long equity security positions and $30 in short market index risk, resulting in a portfolio that generally

has 100% net equity market exposure.

The investment strategy is intended to enable the Fund to take advantage of the expected value (or alpha)

associated with the Fund’s individual portfolio investments while maintaining a level of risk similar to the

overall market. The hedging strategy is implemented through the use of derivative instruments in

compliance with NI 81-102 including by selling market index futures contracts.

The portfolio holdings are reconstituted and rebalanced monthly. The Investment Advisor may, in its

discretion, change the frequency with which the portfolio is reconstituted and rebalanced. With respect to

the Mutual Fund Shares and ETF Shares (other than the ETF Non-Currency Hedged Shares and Non-

Currency Hedged Mutual Fund Shares (as defined herein)) generally, a substantial portion of the foreign

currency exposure within the portfolio will be hedged back to the Canadian dollar by using derivatives

including currency forward contracts in the Investment Advisor’s discretion. With respect to the ETF Non-

Currency Hedged Shares and Non-Currency Hedged Mutual Fund Shares, the foreign currency exposure

of the portfolio will not be hedged back to the Canadian dollar.


The Purpose Multi-Strategy Market Neutral Fund seeks to achieve its investment objectives by investing

in long and short positions across multiple asset classes, which may include, but are not limited to, equity

securities, fixed income securities, commodities and currencies. Positions are chosen by the Investment

Advisor based on an analysis of technical trends and fundamental outperformance factors that are tailored

to each asset class. The Fund’s investment strategy is designed to provide market-neutral returns that are

non-correlated to the broader equity and fixed income markets.

Utilizing a well-diversified portfolio of instruments, the Fund seeks exposure to the following strategies:

Equities

The Fund’s equity positions are comprised of long and short positions chosen using a multi-factor,

fundamental rules-based portfolio selection strategy to select portfolio securities from a universe of global

equities that emphasizes factors that have shown to be effective at differentiating between strong and weak

performing stocks including: fundamental change, valuation, growth and quality. The Investment Advisor

will tactically hedge the market exposure of the Fund’s equity portfolio such that the Fund’s equity net

market exposure will range between 0% and 50% of the Fund’s NAV. This hedging is intended to enable

the equity portfolio to take advantage of the expected value (or alpha) associated with the Fund’s individual

portfolio investments but with reduced risk that is associated with the overall market (or beta). Tactical

hedging is implemented through the use of derivative instruments in compliance with NI 81-102 including

by selling market index futures contracts.

36

Fixed Income

The Fund’s fixed income positions will be designed to capture non-traditional returns from global fixed

income markets. The Fund may take long and short positions based on quantitative, rules-based scoring

methodologies that reflect both technical trends and long-term outperformance factors that are expected to

include, but are not limited to, interest rate differentials and price movements. The universe of the Fund’s

fixed income securities may include, but is not limited to, government debt, investment grade corporate

debt, notes and high yield debt instruments. The Fund may invest in (i) derivatives such as options, futures

contracts, forward contracts, swaps and credit derivatives and/or (ii) underlying funds, in each case as

permitted by Canadian securities legislation, to hedge market exposure, to protect capital, to generate

income, hedge against losses from changes in the prices of the Fund’s investments and from exposure to

foreign currencies and/or as a substitute for direct investment. The Investment Advisor may, in its

discretion, add or remove countries from the universe at any time without notice.

Commodities

The Fund’s commodity positions are designed to capture non-traditional returns from the broad commodity

market. The Fund will obtain long and short positions based on quantitative, rules-based scoring


include, but are not limited to, term structure risk premiums. Term structure is the price difference between

futures contracts with different maturity dates. Term structure risk premium refers to the expected

outperformance of commodities with downward sloping term structures (or commodities with positive roll-

yields) over commodities with upward sloping term structures (or commodities with negative roll-yields).

The universe of commodities includes futures, ETFs and options on futures or ETFs linked to energy

commodities, precious and base metals and agricultural commodities including grains and oilseeds, softs

and livestock. The Investment Advisor may, in its discretion, add or remove commodities which the Fund

obtains exposure to at any time without notice.

Currencies

The Fund’s currency positions are designed to capture non-traditional returns from global currency markets.

The Fund will take long and short positions based on quantitative, rules-based scoring methodologies that

reflect both technical trends and long-term outperformance factors that are expected to include, but are not

limited to, interest rate differentials. The universe of currencies covers developed and emerging countries

which may include the Australian Dollar, Brazilian Real, Canadian Dollar, Chilean Peso, Czechoslovakian

Krona, European Union Euro, British Pound, Hungarian Forint, Indonesian Rupiah, Japanese Yen, Korean

Won, Mexican Peso, Malaysian Ringgit, Norwegian Krone, New Zealand Dollar, Polish Zloty, Swedish

Krona, Singaporean Dollar, Thai Baht, Turkish Lira, Taiwan Dollar, South African Rand and United States

Dollar. The Investment Advisor may, in its discretion, add or remove countries from the universe at any

time without notice.

The Fund is diversified at both the asset class and individual security levels in order to manage risk. In

addition, offsetting long and short positions, or hedges, used to manage the risk of adverse directional

market moves. The Investment Advisor also believes that the use of technical momentum factors provides


The Fund provides exposure to several absolute return strategies through one fund offering. The Investment

Advisor may use additional investment strategies in the future in order to meet the Fund’s investment

objectives. The portfolio holdings are reconstituted and rebalanced at the discretion of the Investment

Advisor. Generally, a substantial portion of the foreign currency exposure within the portfolio will be

37

hedged back to the Canadian dollar by using derivatives including currency forward contracts in the

Investment Advisor’s discretion.


The Purpose Alternative Yield Fund seeks to achieve its investment objectives by using primarily rules-

based portfolio selection strategies to invest in securities of various asset classes, which may include, but

are not limited to, equity securities, fixed income securities, commodities, currencies and cash in order to

create value, generate income and reduce risk over the investment period. The Fund may invest up to 100%

of its assets in foreign securities.

The Fund may (a) write cash-covered put options in respect of individual securities in order to receive

premium income, reduce overall portfolio volatility and reduce the net cost of acquiring the securities

subject to put options, (b) write covered call options on individual securities to seek to receive premium

income, reduce overall portfolio volatility and enhance the portfolio’s total return, (c) invest in or use

warrants, ETFs and derivatives such as options, forward contracts, futures contracts and swaps for both

hedging and non-hedging purposes to generate income, hedge against losses from changes in the prices of

the Fund’s investments and from exposure to foreign currencies and/or gain exposure to individual

securities and markets instead of buying the securities directly or (d) hold cash or fixed income securities

for strategic reasons or to provide cover for the writing of cash-covered put options in respect of securities

in which the Fund is permitted to invest. Such options in respect of (a) and (b) above may be either

exchange-traded or over-the-counter options. The Fund is exposed to securities traded in foreign currencies

and may, in the Investment Advisor’s discretion, enter into currency hedging transactions (including

currency forward contracts) to reduce the effects of changes in the value of foreign currencies relative to

the value of the Canadian dollar.

The portfolio holdings are reconstituted and rebalanced monthly. The Investment Advisor may, in its

discretion, change the frequency with which the portfolio is reconstituted and rebalanced.


The Purpose Alternative Strategies Fund seeks to achieve its investment objectives by investing in long and

short positions across multiple asset classes, which may include, but are not limited to, equity securities,

fixed income securities, commodities, currencies in compliance with Canadian securities legislation.

Positions are chosen by the Investment Advisor based on an analysis of technical trends and fundamental

outperformance factors that are tailored to each asset class. The Fund’s investment strategy is designed to

provide market-neutral returns that are non-correlated to the broader equity and fixed income markets.

Utilizing a well-diversified portfolio of instruments, the Fund seeks exposure to the following strategies:

Equities

The Fund’s equity positions will be comprised of long and short positions chosen using a multi-factor,

fundamental rules-based portfolio selection strategy to select portfolio securities from a universe of global

equity securities that emphasizes factors that have shown to be effective at differentiating between strong

and weak performing stocks including: fundamental change, valuation, growth and quality. The Fund may

also use technical trend factors as part of its equity security selection process. The Investment Advisor may,

in its sole discretion hedge the market exposure of the Fund’s equity portfolio to enable the equity portfolio

to take advantage of the expected value (or alpha) associated with the Fund’s individual portfolio

investments but with reduced risk that is associated with the overall market (or beta). Tactical hedging will

38

be implemented through the use of derivative instruments in compliance with NI 81-102 including by, but

not limited to, selling market index futures contracts, selling put options and selling call options.

Fixed Income

The Fund’s fixed income positions will be designed to capture non-traditional returns from global fixed

income markets. The Fund may take long and short positions based on quantitative, rules-based scoring


include, but are not limited to, interest rate differentials and price movements. The universe of the Fund’s

fixed income securities may include, but is not limited to, government debt, investment grade corporate

debt, notes and high yield debt instruments. The Fund may invest in (i) derivatives such as options, futures

contracts, forward contracts, swaps and credit derivatives and/or (ii) underlying funds, in each case as

permitted by Canadian securities legislation, to hedge market exposure, to protect capital, to generate

income, hedge against losses from changes in the prices of the Fund’s investments and from exposure to

foreign currencies and/or as a substitute for direct investment. The Investment Advisor may, in its


Commodities

The Fund’s commodity positions will be designed to capture non-traditional returns from the broad

commodity market. The Fund will obtain long and short positions based on quantitative, rules-based scoring


include, but are not limited to, term structure risk premiums. Term structure is the price difference between

futures contracts with different maturity dates. Term structure risk premium refers to the expected

outperformance of commodities with downward sloping term structures (or commodities with positive roll-

yields) over commodities with upward sloping term structures (or commodities with negative roll-yields).

The universe of commodities will include, but is not limited to, futures, ETFs and options on futures or

ETFs linked to energy commodities, precious and base metals, and agricultural commodities including

grains and oilseeds, softs and livestock. The Investment Advisor may, in its discretion, add or remove

commodities to which the Fund obtains exposure to at any time without notice.

Currencies

The Fund’s currency positions will be designed to capture non-traditional returns from global currency

markets. The Fund will take long and short positions based on quantitative, rules-based scoring


include, but are not limited to, interest rate differentials and price movements. The universe of currencies

covers developed and emerging countries which may include the Australian Dollar, Brazilian Real,

Canadian Dollar, Chilean Peso, Czechoslovakian Krona, European Union Euro, British Pound, Hungarian

Forint, Indonesian Rupiah, Japanese Yen, Korean Won, Mexican Peso, Malaysian Ringgit, Norwegian

Krone, New Zealand Dollar, Polish Zloty, Swedish Krona, Singaporean Dollar, Thai Baht, Turkish Lira,

Taiwan Dollar, South African Rand and United States Dollar. The Investment Advisor may, in its


Derivatives Strategies

The Fund will employ derivative instruments across various asset classes in compliance with Canadian

securities legislation including options, futures contracts, warrants, forward contracts and swaps to enhance

portfolio income, offer long-term capital appreciation and preserve capital. The Fund may (a) write cash-

covered put options in respect of individual securities in order to receive premium income, reduce overall

portfolio volatility and reduce the net cost of acquiring the securities subject to put options or (b) write

39

covered call options on individual securities to seek to receive premium income, reduce overall portfolio

volatility and enhance the portfolio’s total return. The Fund may also hold cash or fixed income securities

for strategic reasons or to provide cover for the writing of cash-covered put options in respect of securities

in which the Fund is permitted to invest. Such options may be either exchange-traded or over-the-counter

options.

The Fund may invest in or use (a) warrants, ETFs and derivatives such as options, forward contracts, futures

contracts and swaps for both hedging and non-hedging purposes to generate income, as permitted by

Canadian securities legislation, to hedge market exposure, to protect capital, to generate income, hedge

against losses from changes in the prices of the Fund’s investments and from exposure to foreign currencies

and/or as a substitute for direct investment. The Fund is exposed to securities traded in foreign currencies

and may in the Investment Advisor’s discretion, enter into currency hedging transactions (including

currency forward contracts) to reduce the effects of changes in the value of foreign currencies relative to

the value of the Canadian dollar.

The Fund is diversified at both the asset class and individual security levels in order to manage risk. In

addition, offsetting long and short positions, or hedges, are used to manage the risk of adverse directional

market moves. The Investment Advisor also believes that the use of technical momentum factors provides


The portfolio holdings are reconstituted and rebalanced in the sole discretion of the Investment Advisor.

Securities Lending

In order to generate additional income, a Fund may, in compliance with NI 81-102, lend securities to

securities borrowers acceptable to the Manager pursuant to the terms of the Securities Lending Agreement

(as defined herein) under which: (a) the borrower will pay to the Fund a negotiated securities lending fee

and will make compensation payments to the Fund equal to any distributions received by the borrower on

the securities borrowed; (b) the securities loans qualify as “securities lending arrangements” for the

purposes of the Tax Act; (c) the Fund will receive collateral security equal to at least 102% of the value of

the portfolio securities loaned; and (d) immediately after the Fund enters into the transaction, the aggregate

market value of all securities loaned and not yet returned to it does not exceed 50% of the NAV of the Fund.

The securities lending agent for the Fund will be responsible for the ongoing administration of the securities

loans, including the obligation to mark-to-market the collateral on a daily basis. Any securities lending

transactions entered into by a Fund may be terminated by the Fund at any time.

Use of Derivative Instruments

A Fund may invest in or use derivatives such as options, futures, forward contracts and swaps for purposes

that include gaining exposure to securities without buying the securities directly or as otherwise set forth in

the Fund’s investment objectives. A Fund may invest in or use derivative instruments only if the use of

such derivative instruments is in compliance with applicable securities law, including with respect to limits

on counterparty exposure, and is consistent with the investment objectives and investment strategies of the

Fund. The Funds are managed in accordance with the restrictions and practices related to derivatives set

out in NI 81-102, subject to those exceptions relating to commodity pools as outlined in NI 81-104.

Accordingly, the Funds are accorded greater flexibility to invest in and use derivatives for non-hedging

purposes, such as commodity futures contracts, than mutual funds that are not subject to NI 81-104.

Each of the Purpose Diversified Real Asset Fund, Purpose Multi-Strategy Market Neutral Fund, Purpose

Alternative Yield Fund and Purpose Alternative Strategies Fund will use futures contracts to gain exposure

to movements in underlying commodity prices. Futures contracts are exchange-traded and derive their value

40

from movements in the spot price of the underlying commodity. On specified dates these futures contracts

will be rolled into subsequent futures contracts before the current position expires according to a defined

schedule. This allows the Purpose Diversified Real Asset Fund, Purpose Multi-Strategy Market Neutral

Fund and Purpose Alternative Strategies Fund to maintain exposure to the price of the underlying

commodity without having to deliver or take delivery of the actual underlying commodity.

The Purpose Enhanced US Equity Fund will sell futures to hedge up to 30% of the portfolio’s market

exposure in order to reduce overall market risk associated with the leveraged portion of the portfolio

investments such that the net market exposure of the Fund will generally be targeted at 100% of the NAV

of the Fund.

See “Risk Factors – General Risks Relating to an Investment in the Funds – Use of Derivative Instruments”

and “Risk Factors – Additional Risks Relating to an Investment in Certain Funds”.

Action on Portfolio Adjustment

Whenever the portfolio of a Fund is rebalanced or adjusted by adding securities to, or subtracting securities

from, that portfolio, the Fund will generally acquire and/or dispose of the appropriate number of securities.

On a rebalancing: (a) ETF Shares and ETF Units may be issued, or cash may be paid, in consideration for

Constituent Securities to be acquired by a Fund as determined by the Manager or the Investment Advisor;

and (b) ETF Shares and ETF Units may be exchanged in consideration for those securities that the Manager

or the Investment Advisor determines should be sold by a Fund, or cash may be paid, as determined by the

Manager or the Investment Advisor. Generally, such transactions may be implemented by a transfer of

Constituent Securities to a Fund that the Manager or the Investment Advisor determines should be acquired

by the Fund or a transfer of those securities that the Manager or Investment Advisor determines should be

sold by the Fund.

The portfolio of each of the Funds is rebalanced as follows; however, the Manager may, in its discretion,

change the frequency with which a portfolio is reconstituted and rebalanced at any time without notice:

Fund Rebalanced

Purpose Diversified Real Asset Fund Quarterly

Purpose Enhanced US Equity Fund Monthly

Purpose Multi-Strategy Market Neutral Fund Monthly

Purpose Alternative Yield Fund Monthly

Purpose Alternative Strategies Fund At the discretion of the Investment Advisor

Take-over Bids for Constituent Issuers

If a take-over bid (including an issuer bid) is made for a Constituent Issuer, the Manager, in its discretion,

may or may not tender securities of such Constituent Issuer. If securities are tendered from the portfolio of

a Fund, they may or may not be taken up under the bid. If a take-over bid is successful, the securities of

such issuer may no longer be included in the portfolio of the Fund as described under “Investment Strategies

– Action on Portfolio Adjustment”.

OVERVIEW OF THE SECTORS IN WHICH THE FUNDS INVEST


The Purpose Diversified Real Asset Fund invests in a diversified portfolio of inflation sensitive investments,

including precious metals and related equities, industrial, energy and agricultural commodities, real estate

41

investment trusts, and inflation adjusted bonds. See “Investment Strategies – Purpose Diversified Real

Asset Fund”.


The Purpose Enhanced US Equity Fund invests in a diversified portfolio of North American equities. See

“Investment Strategies – Purpose Enhanced US Equity Fund”.


The Purpose Multi-Strategy Market Neutral Fund invests in a diversified portfolio of long and short

positions across multiple asset classes including equities, fixed income securities, commodities and

currencies. See “Investment Strategies – Purpose Multi-Strategy Market Neutral Fund”.


The Purpose Alternative Yield Fund invests in a diversified portfolio across multiple asset classes including,

but not limited to, equities, fixed income securities, commodities and currencies. See “Investment Strategies

– Purpose Alternative Yield Fund”.


The Purpose Alternative Strategies Fund invests in various asset classes including equity securities, fixed

income securities, commodities and currencies. See “Investment Strategies – Purpose Alternative Strategies

Fund”.

INVESTMENT RESTRICTIONS

The Funds are subject to certain restrictions and practices contained in Canadian securities legislation. The

Funds are managed in accordance with these restrictions and practices, except as otherwise permitted by

exemptions provided by Canadian securities regulatory authorities. See “Exemptions and Approvals”. The

Funds are managed in accordance with the restrictions and practices set out in NI 81-102, except as

otherwise permitted by NI 81-104, which regulates mutual funds that are commodity pools under applicable

Canadian securities law, and subject to receipt of any exemptions therefrom obtained by the Funds. A

change to the fundamental investment objectives of a Fund would require the approval of the

securityholders of the Fund. See “Securityholder Matters – Matters Requiring Securityholders’ Approval”.

FEES AND EXPENSES

Fees and Expenses Payable by the Funds

Management Fees


Each Fund will pay the Manager a management fee as set forth in the table below based on the average

daily NAV of the ETF Shares and the ETF Units, as the case may be, of the Fund. The management fee,

plus applicable HST, is calculated and accrued daily and paid monthly in arrears. The Manager may, from

time to time in its discretion, waive all or a portion of the management fee charged at any given time.

42

Fund Annual Management

Fee (%)

Purpose Diversified Real Asset Fund 0.60%

Purpose Enhanced US Equity Fund 0.80%

Purpose Multi-Strategy Market Neutral Fund 0.95%

Purpose Alternative Yield Fund 0.75%

Purpose Alternative Strategies Fund 0.95%


The Funds will pay the Manager a management fee as set forth in the table below based on the average

daily NAV of the applicable series or class of the Fund. The management fee, plus applicable HST, is

calculated and accrued daily and paid monthly in arrears. The Manager may, from time to time in its



Purpose Diversified

Real Asset Fund

A 1.60% (including a service fee of 1.00% as described below)

F 0.60%

I negotiated management fee paid directly to Purpose, which will

not exceed 0.60%

D 0.85% (including a service fee of 0.25% as described below)

XA 1.60% (including a service fee of 1.00% as described below)

XF 0.60%

Purpose Enhanced

US Equity Fund


F 0.80%


not exceed 0.80%


XA 1.80% (including a service fee of 1.00% as described below)

XF 0.80%

Purpose Multi-

Strategy Market

Neutral Fund


F 0.95%


not exceed 0.95%


Purpose Alternative

Yield Fund

43



F 0.75%


Purpose Alternative

Strategies Fund


F 0.95%


The management fee, plus applicable HST, is calculated and accrued daily and paid monthly in arrears. The

Investment Advisor is entitled to compensation for its services from the Manager out of the management

fee. The Manager may, from time to time in its discretion, waive all or a portion of the management fee

charged at any given time.

In addition, holders of Series XA Shares and Series XF Shares will pay an additional fee of up to 0.65%

per annum based on the value of the securities vended in and held by the Company, plus an amount in

respect of hedging costs (based on then current market rates) incurred in connection with all such holdings,

on a pro rata basis.

Trailing Commission

The Manager will pay a service fee, also known as a “trailing commission”, to the dealer of each holder of

Series A Shares, Series D Shares, Series XA Shares, Class A Units or Class D Units, as the case may be,

quarterly for ongoing services that the dealer may provide to the holder of Series A Shares, Series D Shares,

Series XA Shares, Class A Units or Class D Units, as applicable, for so long as the holder continues to hold

Series A Shares, Series D Shares, Series XA Shares, Class A Units or Class D Units, as applicable. The

service fee is paid by the Fund to the Manager. The Manager will in turn remit the service fee to the dealers.

The service fee for Series A Shares, Series XA Shares and Class A Units is equal to 1.00% per annum of

the average daily NAV per Series A Share, Series XA Share or Class A Unit of the Fund, as the case may

be, held, plus applicable HST. The service fee for Series D Shares and Class D Units is equal to 0.25% per

annum of the average daily NAV per Series D Share or Class D Unit of the Fund, as the case may be, held,

plus applicable HST. No service fee is payable on the ETF Shares, ETF Units, Mutual Fund Shares (other

than Series A Shares, Series D Shares and Series XA Shares) or Mutual Fund Units (other than Class A

Units and Class D Units). The Manager may, in its discretion, change the terms of the service fee at any

time subject to applicable securities legislation.

Operating Expenses

PFC Funds

The Manager has agreed to pay for certain operating and administrative expenses (the “Corporate

Administrative Expenses”) incurred by each PFC Fund in respect of the ETF Shares, Series A Shares,

Series F Shares, Series D Shares, Series XA Shares and Series XF Shares which exceed 0.05% per annum

of the NAV each of such series of shares. This means each Fund pays only up to 0.05% per annum of the

NAV of each such series of shares of the Fund for Corporate Administrative Expenses, plus the other costs

and expenses referred to below. Corporate Administrative Expenses include accounting, audit and legal

fees, custodial fees, investor reporting costs for annual and semi-annual financial statements, expenses in

connection with the preparation of prospectus and other regulatory reports, regulatory filing fees, exchange

44

listing fees (if applicable) and other operating and administrative expenses incurred in connection with the

day-to-day operation of the Fund. However, Corporate Administrative Expenses do not include, and each

Fund will be responsible for paying (the “Corporate Additional Expenses”), the costs and expenses

incurred in complying with NI 81-107 (including any expenses related to the implementation and on-going

operation of an independent review committee), the costs and expenses incurred in connection with the

dividend reinvestment plan, portfolio transaction costs including brokerage expenses and commissions and

costs associated with the use of derivatives (if applicable) transfer agency fees and expenses, income and

withholding taxes as well as all other applicable taxes, including HST, bank charges and interest expenses,

the costs of complying with any new governmental or regulatory requirement introduced after the Fund

was established and extraordinary expenses including any costs associated with the printing and distribution

of any documents that the securities regulatory authorities require be sent or delivered to investors in the

Fund. The Corporate Administrative Expenses and Corporate Additional Expenses payable by the Fund,

plus applicable HST, will be calculated and accrued daily and paid monthly in arrears.

In addition, holders of Series XA Shares and Series XF Shares will pay an additional fee of up to 0.65%

per annum based on the value of the securities vended in and held by the Company, plus an amount in

respect of hedging costs (based on then current market rates) incurred in connection with all such holdings,

on a pro rata basis.

The Manager may, from time to time, in its sole discretion, pay all or a portion of any Corporate Additional

Expenses which would otherwise be payable by the Funds.

See “Fees and Expenses – Fees and Expenses Payable by the Funds – Negotiated Management Fee” below

for details regarding Series I Shares.

Purpose Trust Funds

The Manager has agreed to pay for certain operating and administrative expenses (the “Trust

Administrative Expenses”) incurred by each Purpose Trust Fund in respect of the ETF Units, Class A

Units, Class F Units and Class D Units which exceed 0.05% per annum of the NAV of each class of units

of the Fund. This means that each Fund pays only up to 0.05% per annum of the NAV of each class of units

of the Fund for Trust Administrative Expenses, plus the other costs and expenses referred to below. Trust

Administrative Expenses include accounting, audit and legal fees, custodial fees, investor reporting costs

for annual and semi-annual financial statements, expenses in connection with the preparation of prospectus

and other regulatory reports, regulatory filing fees, exchange listing fees (if applicable) and other operating

and administrative expenses incurred in connection with the day-to-day operation of a Fund. However,

Trust Administrative Expenses do not include, and each Fund will be responsible for paying (the “Trust

Additional Expenses”), the costs and expenses incurred in complying with NI 81-107 (including any

expenses related to the implementation and on-going operation of an independent review committee), the

costs and expenses incurred in connection with the distribution reinvestment plan, portfolio transaction

costs including brokerage expenses and commissions and costs associated with the use of derivatives (if

applicable), transfer agency fees and expenses, income and withholding taxes as well as all other applicable

taxes, including HST, bank charges and interest expenses, the costs of complying with any new

governmental or regulatory requirement introduced after the Fund was established and extraordinary

expenses including any costs associated with the printing and distribution of any documents that the

securities regulatory authorities require be sent or delivered to investors in the Fund. The Trust

Administrative Expenses and Trust Additional Expenses payable by a Fund, plus applicable HST, will be

calculated and accrued daily and paid monthly in arrears.

The Manager may, from time to time, in its sole discretion, pay all or a portion of any Trust Additional

Expenses which would otherwise be payable by a Fund.

45

See “Fees and Expenses – Fees and Expenses Payable by the Funds – Negotiated Management Fee” below

for details regarding Class I Units, “Fees and Expenses – Fees and Expenses Payable by the Funds –

Operating Fees” and “Organization and Management Details of the Funds – The Manager, Promoter and

Trustee”.

Negotiated Management Fee

Holders of Series I Shares and/or Class I Units pay a negotiated management fee directly to Purpose plus

(a) any additional amounts for Corporate Administrative Expenses or Trust Administrative Expenses, as

the case may be, up to 0.05% per annum of the NAV of such series of shares or class of units, as applicable,

(b) any Corporate Additional Expenses or Trust Additional Expenses, as the case may be, and (c) any

additional expenses, as may be agreed to by the holder and Purpose. The negotiated management fee may

vary for each Fund and each investor in a Fund. See the “Fees and Expenses – Fee and Expenses Payable

by the Funds – Management Fees – Mutual Fund Shares/Mutual Fund Units” for information on the

maximum percentage of the negotiated management fee which may payable by an investor in Series I

Shares or Class I Units of the Funds.

Management Fee Rebates


To achieve effective and competitive management fees, the Manager may reduce the management fee borne

by certain holders of ETF Shares or ETF Units who have signed an agreement with the Manager. The

Manager will pay out the amount of the reduction in the form of a management fee rebate directly to the

eligible securityholder. The decision to pay management fee rebates is in the Manager’s discretion and

depends on a number of factors, including the size of the investment and a negotiated fee agreement between

the securityholder and the Manager. The Manager reserves the right to discontinue or change management

fee rebates at any time.


To achieve effective and competitive management fees, the Manager may reduce the management fee borne

by certain holders of Mutual Fund Shares or Mutual Fund Units, as the case may be, who have signed an

agreement with the Manager. The Manager will reinvest the amount of the reduction in additional Mutual

Fund Shares or Mutual Fund Units unless otherwise requested. The decision to pay management fee rebates

is in the Manager’s discretion and depends on a number of factors, including the size of the investment and

a negotiated fee agreement between the securityholder and the Manager. The Manager reserves the right to

discontinue or change management fee rebates at any time.

Fees and Expenses Payable Directly by Securityholders

Short-Term Trading Fees


At the present time, the Manager is of the view that it is not necessary to impose any short-term trading

restrictions on the ETF Shares or ETF Units.

Mutual Fund Shares

If a holder of Mutual Fund Shares redeems or switches Mutual Fund Shares within 30 days of purchasing

46

such Mutual Fund Shares, the Manager may charge a short-term trading fee on behalf of the Fund of up to

2% of the value of such shares in circumstances where it determines that the trading activity represents

market timing or excessive short-term trading. This charge is in addition to any switch fee that the

shareholder may pay. Each additional switch counts as a new purchase for this purpose. No short-term

trading fees are charged on redemptions made under a systematic withdrawal plan or redemptions that may

occur when an investor fails to meet the minimum investment amount for the Fund. See “Redemption,

Exchange and Switches of Securities – Short-Term Trading”.

Mutual Fund Units

If a holder of Mutual Fund Units redeems Mutual Fund Units within 30 days of purchasing such Mutual

Fund Units, the Manager may charge a short-term trading fee on behalf of the Fund of up to 2% of the value

of such units in circumstances where it determines that the trading activity represents market timing or

excessive short-term trading. No short-term trading fees are charged on redemptions made under a

systematic withdrawal plan or redemptions that may occur when an investor fails to meet the minimum

investment amount for the Fund. See “Redemption, Exchange and Switches of Securities – Short-Term

Trading”.

Negotiated Management Fee

Holders of Series I Shares/Class I Units will pay a negotiated management fee directly to the Manager. See

“Fees and Expenses – Fees and Expenses Payable by the Funds – Negotiated Management Fee”.

ANNUAL RETURNS, MANAGEMENT EXPENSE RATIO AND TRADING EXPENSE RATIO

The following chart provides the annual returns, the management expense ratio (“MER”) and the trading

expense ratio (“TER”) for the ETF Shares or ETF Units, as applicable, of the Funds as disclosed in the

Funds’ management reports of fund performance from the date of its inception to December 31, 2017. This

information is not available for the New Purpose Funds because no ETF units of the New Purpose Funds

had been issued as of December 31, 2017.

2017 2016 2015 2014

Purpose Diversified Real Asset Fund –

ETF shares

Annual Returns

(%) 4.7% 15.0% -13.40% -3.90%1

MER (%) 0.74% 0.72% 0.75% 0.77%1

TER (%) 0.12% 0.27% 0.28% 0.06%1

Purpose

Enhanced US Equity Fund – ETF shares

Annual Returns

(%) 15.8% 21.5% -8.30% 7.00%

MER (%) 1.31% 1.18% 1.15% 1.13%

TER (%) 0.12% 0.12% 0.21% 0.26%

Purpose

Enhanced US Equity Fund – ETF non-

currency hedged shares

Annual Returns

(%) 10.1% 18.9% 6.40% 10.00%2

MER (%) 1.29% 1.16% 1.15% 1.13%2

TER (%) 0.11% 0.17% 0.36% 0.26%2

47

Purpose Multi-Strategy Market Neutral

Fund – ETF Units

Annual Returns

(%) 6.9% 3.6% 2.20% 3.00%3

MER (%) 1.06% 1.07% 1.09% 1.14%3

TER (%) 0.05% 0.06% 0.12% 0.19%3

Notes:

(1) For the period November 5, 2014 to December 31, 2014.



RISK FACTORS

In addition to the considerations set out elsewhere in this prospectus, the following are certain

considerations relating to an investment in the Funds that prospective investors should consider before

purchasing securities of the Funds.

General Risks Relating to an Investment in the Funds

Fluctuations in NAV and NAV per Share/Unit

The NAV per share or unit of a Fund, as the case may be, will vary according to, among other things, the

value of the securities held by the Fund. The Manager and the Funds have no control over the factors that

affect the value of the securities held by a Fund, including factors that affect the equity and bond markets

generally such as general economic and political conditions, fluctuations in interest rates and factors unique

to each Constituent Security.

Risk of Loss

An investment in the Funds is not guaranteed by any entity. Unlike bank accounts or guaranteed investment

certificates, an investment in the Funds is not covered by the Canada Deposit Insurance Corporation or any

other government deposit insurer.

Exchange Rate Risk

Changes in foreign currency exchange rates may affect the NAV of the shares or units of a Fund, as the

case may be, that holds investments denominated in currencies other than the Canadian dollar. Some of the

series of shares of the PFC Funds and some of the classes of units of the Purpose Trust Funds are Canadian

dollar denominated. Generally, a substantial portion of the foreign currency exposure within a Fund’s

portfolio will be hedged back to the Canadian dollar in the Investment Advisor’s discretion. The

effectiveness of the Investment Advisor’s currency hedging strategy will, in general, be affected by the

volatility of the Canadian dollar relative to the currencies to be hedged. Increased volatility will generally

reduce the effectiveness of the currency hedging strategy. Some of the series of Mutual Fund Shares of the

PFC Funds and some of the classes of Mutual Fund Units of the Purpose Trust Funds may also be

denominated in U.S. dollars. The ability to purchase U.S. dollar denominated Mutual Fund Shares or

Mutual Fund Units, as applicable, is offered only as a convenience for investors and does not act as a

currency hedge between the Canadian dollar and the U.S. dollar. The effectiveness of the Investment

Advisor’s currency hedging strategy may also be affected by any significant difference between Canadian

dollar interest rates and foreign currency interest rates.

48

Tax Risk

PFC Funds

If the Company ceases to qualify as a “mutual fund corporation” under the Tax Act, the income tax

considerations described under “Income Tax Considerations – PFC Funds” would be materially and

adversely different in certain respects.

There can be no assurance that Canadian federal income tax laws and the administrative policies and

assessing practices of the Canada Revenue Agency respecting the treatment of mutual fund corporations

will not be changed in a manner that adversely affects the Funds or their shareholders. For example, changes

to tax legislation or the administration thereof could affect the taxation of a Fund or its Constituent Issuers.

Certain tax rules apply to direct and indirect investments by Canadian residents in non-resident trusts (the

“NRT Rules”). It is not expected that the NRT Rules would be applied in respect of investments, if any,

made by the Funds in non-resident funds that are trusts; however no assurances can be given in this regard.

In determining the Company’s income for tax purposes, option premiums received on the writing of covered

call options and cash-covered put options by a Fund and any losses sustained on closing out options, will

be treated for purposes of the Tax Act as capital gains and capital losses in accordance with Canada Revenue

Agency’s published administrative practice. Canada Revenue Agency’s practice is not to grant advance

income tax rulings on the characterization of items as capital or income and no advance income tax ruling

has been applied for or received from the Canada Revenue Agency.

If some or all of the transactions undertaken by the Company in respect of derivatives, including covered

options and securities, are reported on capital account but are subsequently determined to be on income

account, the net income of the Company for tax purposes and the taxable component of distributions to

shareholders could increase. Any such redetermination by the Canada Revenue Agency may result in the

Company being liable for additional taxes. Such potential liability may reduce NAV per series or NAV per

share.

Purpose Trust Funds

If a Purpose Trust Fund does not or ceases to qualify as a “mutual fund trust” under the Tax Act, the income

tax considerations described under “Income Tax Considerations – Purpose Trust Funds” would be

materially and adversely different in certain respects.

Certain tax rules apply to direct and indirect investments by Canadian residents in non-resident trusts (the

“NRT Rules”). It is not expected that the NRT Rules would be applied in respect of investments, if any,

made by the Fund in non-resident funds that are trusts; however no assurances can be given in this regard.

The Tax Act contains tax loss restriction rules that apply to trusts such as the Purpose Trust Funds. The loss

restriction rules will generally apply to the extent that any person, together with other persons with whom

that person is affiliated within the meaning of the Tax Act, or any group of persons acting in concert,

acquires units of a Purpose Trust Fund having a fair market value that is greater than 50% of the fair market

value of all the units of the Fund. If such circumstances occur, the Purpose Trust Fund will have a deemed

tax year end and any undistributed income and realized capital gains (net of any applicable losses) would

be expected to be made payable to all unitholders of the Fund as a distribution on their units (or tax thereon

paid by the Fund in respect of such year). Accordingly, in such event, distributions on the units in the form

of additional units (which will be automatically consolidated) and/or cash may be declared and paid to

unitholders. In addition, accrued capital losses and certain other realized losses of a Purpose Trust Fund

49

would be unavailable for use by the Fund in future years. Given the manner in which units are distributed,

there may be circumstances in which a Purpose Trust Fund will not be able to control or identify a “loss

restriction event”. As a result, there can be no assurance that the Purpose Trust Fund will not be subject to

such a “loss restriction event” and no assurance as to when and to whom any such distributions will be

made, or that the Fund will not be required to pay tax on such undistributed income and taxable capital

gains.

In determining a Purpose Trust Fund’s income for tax purposes, option premiums received on the writing

of covered call options and cash-covered put options by a Fund and any losses sustained on closing out

options, will be treated for purposes of the Tax Act as capital gains and capital losses in accordance with

Canada Revenue Agency’s published administrative practice. Canada Revenue Agency’s practice is not to

grant advance income tax rulings on the characterization of items as capital or income and no advance

income tax ruling has been applied for or received from the Canada Revenue Agency.

If some or all of the transactions undertaken by a Purpose Trust Fund in respect of derivatives, including

covered options and securities are reported on capital account but are subsequently determined to be on

income account, the net income of the Fund for tax purposes and the taxable component of distributions to

unitholders could increase. Any such redetermination by the Canada Revenue Agency may result in the

Purpose Trust Fund being liable for additional taxes. Such potential liability may reduce NAV per unit.

Changes in Legislation

There can be no assurance that tax, securities or other laws will not be changed in a manner that adversely

affects the distributions received by the PFC Funds or by their shareholders.

There can be no assurance that tax, securities or other laws will not be changed in a manner that adversely

affects the distributions received by the Purpose Trust Funds or by their unitholders.

There can be no assurance that Canadian federal income tax laws and the administrative policies and

assessing practices of the Canada Revenue Agency respecting the treatment of mutual fund trusts or mutual

fund corporations will not be changed in a manner that adversely affects the Funds or their securityholders.

For example, changes to tax legislation or the administration thereof could affect the taxation of a Fund or

its Constituent Issuers.

Use of Derivative Instruments

The Funds may use derivative instruments from time to time as described under “Investment Strategies –

Use of Derivative Instruments”. The use of derivative instruments involves risks different from, and

possibly greater than, the risks associated with investing directly in securities and other traditional

investments. Risks associated with the use of derivatives include: (a) there is no guarantee that hedging to

reduce risk will not result in a loss or that there will be a gain; (b) there is no guarantee that a market will

exist when a Fund wants to complete or settle the derivative contract, which could prevent the Fund from

reducing a loss or making a profit; (c) securities exchanges may impose trading limits on options and futures

contracts, and these limits may prevent a Fund from completing or settling the derivative contract; (d) a

Fund could experience a loss if the other party to the derivative contract is unable to fulfill its obligations;

(e) if a Fund has an open position in an option, a futures contract or a forward contract with a dealer who

goes bankrupt, the Fund could experience a loss and, for an open futures or forward contract, a loss of

margin deposited with that dealer; and (f) if a derivative is based on a market index and trading is halted or

disrupted on a substantial number of stocks or bonds in the index or there is a change in the composition of

the index, there could be an adverse effect on the derivative. In circumstances where there is an interest rate

hedge employed, total return on the investment portfolio of a Fund may be higher with the hedge than

50

without it when interest rates rise significantly, but may be lower when interest rates are stable or decrease.

Commodity pools are accorded greater flexibility to invest using derivatives for non-hedging purposes than

mutual funds that are not subject to NI 81-104.

Use of Leverage

It is anticipated that the Purpose Enhanced US Equity Fund may at times incur indebtedness in an amount

of up to 35% of the NAV of the Fund. The indebtedness will be secured by the assets of the Fund. There

can be no assurance that such a strategy will enhance returns and in fact the strategy may reduce returns

(both distributions and capital). If the securities in the portfolio of the Fund suffer a decrease in value, the

leverage component will cause a decrease in NAV of the Fund in excess of that which would otherwise

have occurred.

Securities Lending

The Funds may enter into securities lending arrangements in accordance with NI 81-102 in order to generate

additional income to enhance the NAV of a Fund. In a securities lending transaction, a Fund lends its

securities to a borrower in exchange for a fee and the other party to the transaction delivers collateral to the

Fund in order to secure the transaction.

Securities lending comes with certain risks. If the other party to the transaction cannot complete the

transaction, the Fund may be exposed to the risk of loss should the other party default on its obligation to

return the borrowed securities and the collateral be insufficient to reconstitute the portfolio of loaned

securities. To minimize this risk, the other party must provide collateral that is worth at least 102% of the

value of the Fund’s securities and of the type permitted by NI 81-102. The value of the collateral is

monitored daily and adjusted appropriately by the securities lending agent of the Funds.

The Funds that enter into securities lending transactions may not commit more than 50% of their NAV to

securities lending transactions at any time and such transactions may be ended at any time.

Currency Risk

The assets and liabilities of each Fund are valued in Canadian dollars. If a Fund buys a security denominated

in a foreign currency, during the time that the Fund owns that security, for the purposes of calculating the

NAV of that Fund, the Manager or the Investment Advisor will convert, on a daily basis, the value of the

security into Canadian dollars. Fluctuations in the value of the Canadian dollar relative to the foreign

currency will impact the NAV of the Fund. If the value of the Canadian dollar has increased relative to the

foreign currency, the return on the foreign security may be reduced, eliminated or made negative. The

opposite can also occur and if it does occur, a Fund holding a security denominated in a foreign currency

may benefit from an increase in the value of the foreign currency relative to the Canadian dollar. The

underlying funds in which some of the Funds may invest may not hedge their foreign currency exposure

and, therefore, these Funds may be exposed to fluctuations in these currencies. All or a portion of the foreign

currency exposure of a Fund’s portfolio may be hedged back to the Canadian dollar in the Investment

Advisor’s discretion. However with respect to the non-currency hedged Mutual Fund Shares and ETF Non-

Currency Hedged Shares the foreign currency exposure of the portion of the portfolio attributable to such

shares will not be hedged back to the Canadian dollar.

You may purchase the shares or units, as applicable, of the Funds in U.S. dollars. U.S. dollar denominated

shares and units are offered only as a convenience for investors and do not act as a currency hedge between

the Canadian dollar and the U.S. dollar.

51

Cyber Security Risk

Cyber security risk is the risk of harm, loss and liability resulting from a failure or breach of information

technology systems. Failures or breaches of the information technology systems (“Cyber Security

Incidents”) can result from deliberate attacks or unintentional events and may arise from external or

internal sources. Deliberate cyber attacks include, but are not limited to, gaining unauthorized access to

digital systems (e.g., through “hacking” or malicious software coding) for purposes of misappropriating

assets or sensitive information, corrupting data, equipment or systems, or causing operational disruption.

Deliberate cyber attacks may also be carried out in a manner that does not require gaining unauthorized

access, such as causing denial-of-service attacks on websites (i.e., efforts to make network services

unavailable to intended users).

The primary risks to a Fund from the occurrence of a Cyber Security Incident include disruption in

operations, reputational damage, disclosure of confidential information, the incurrence of regulatory

penalties, additional compliance costs associated with corrective measures and/or financial loss. Cyber

Security Incidents of the Fund’s third party service providers (e.g., administrators, transfer agents,

custodians and sub-advisers) or issuers that the Fund invests in can also subject the Fund to many of the

same risks associated with direct Cyber Security Incidents.

The Manager has established risk management systems designed to reduce the risks associated with cyber

security. However, there is no guarantee that such efforts will succeed. Furthermore, the Funds cannot

control the cyber security plans and systems put in place by its service providers or any other third party

whose operations may affect a Fund or its securityholders. A Fund and its securityholders could be

negatively impacted as a result.

General Risks of Debt Instruments

The Funds may invest directly or indirectly in underlying debt securities that are affected by changes in the

general level of interest rates. Generally, debt securities will decrease in value when interest rates rise and

increase in value when interest rates decline. Periods of increasing interest rates may cause the value of an

investment in the Funds to decrease. The NAV of a Fund will fluctuate with interest rate changes, as well

as other factors, such as changes to maturities and the credit ratings of fixed income investments and the

corresponding changes in the value of the securities to which the Fund is exposed.

The Funds may be affected by a general decline in the Canadian bond market. The value of the corporate

bonds held by a Fund will be affected by the risk of default in the payment of interest and principal and

price changes due to factors such as general economic conditions and Constituent Issuers’ creditworthiness.

Rebalancing and Adjustment Risk

Adjustments to Baskets of Securities held by a Fund to reflect rebalancing of and adjustments to the Fund’s

strategies may depend on the ability of the Manager and the Designated Brokers to perform their respective

obligations under the Designated Broker Agreement(s) (as defined herein). If a Designated Broker fails to

perform, a Fund may be required to sell or purchase, as the case may be, Constituent Securities of the

Baskets of Securities in the market. If this happens, the Fund would incur additional transaction costs.

Cease Trading of Constituent Securities

If Constituent Securities are cease-traded by a securities regulatory authority or other relevant regulator or

stock exchange, the Manager may suspend the exchange or redemption of the Fund’s shares or units until

such time as the transfer of the securities is permitted by law.

52

Illiquid Securities

If a Fund is unable to dispose of some or all of the securities held by it, the Fund may experience a delay in

the receipt of the proceeds of disposition until such time as it is able to dispose of such securities or may be

able to do so only at prices which may not reflect the fair value of such investments. Likewise, if certain

securities are particularly illiquid, the Manager may be unable to acquire the number of securities it would

like at a price acceptable to the Manager on a timely basis.

Reliance on Key Personnel

The Manager and Investment Advisor depend, to a great extent, on the services of a limited number of

individuals in connection with the services provided to the Funds. The loss of such services or the loss of

some key individuals could impair the ability of the Manager and Investment Advisor to perform their

management, administrative and portfolio advisory services, as applicable, on behalf of the Funds.

Absence of an Active Market for the ETF Shares/ETF Units

Although the ETF Shares and ETF Units of the Funds are, or in the case of the New Purpose Funds, will

(subject to satisfying the TSX’s original listing requirements on or before July 26, 2019) be, listed on the

TSX, there can be no assurance that an active public market for the ETF Shares and the ETF Units will

develop or be sustained.

Equity Investment Risk

Equities such as common shares give the holder part ownership in a company. The value of an equity

security changes with the fortunes of the company that issued it. General market conditions and the health

of the economy as a whole can also affect equity prices. Certain securities may be particularly sensitive to

general market movements, which may result in a greater degree of price volatility for such securities and

in the NAV of a Fund that invests in such securities under specific market conditions and over time. Equity

related securities that provide indirect exposure to the equity securities of an issuer, such as convertible

debentures, can also be affected by equity risk.

Asset Class Risk

The Constituent Securities may underperform the returns of other securities that track other countries,

regions, industries, asset classes or sectors. Various asset classes tend to experience cycles of

outperformance and underperformance in comparison to the general securities markets.

Collateral Risk

Changes in the credit risk associated with collateral securities may impact the value of the collateral

securing a loan. The collateral value may decline, be insufficient to meet the obligations of the borrower or

be difficult to liquidate. As a result, a loan may not be fully collateralized and can decline significantly in

value which may negatively affect a Fund.

Credit Risk

Credit risk is the possibility that a borrower, or the counterparty to a derivatives contract, is unable or

unwilling to repay the loan or obligation, either on time or at all. Debt securities issued by companies or

governments in emerging markets often have higher credit risk (a lower credit rating assigned by specialized

credit rating agencies), while debt securities issued by well-established companies or by governments of

53

developed countries tend to have lower credit risk (a higher credit rating). A downgrade in an issuer’s credit

rating can negatively affect a debt security’s market value. Other factors can also influence a debt security’s

market value, such as the level of liquidity of the security and a change in the market perception of the

creditworthiness of the security. Lower rated and unrated debt instruments generally offer a better return

than higher grade debt instruments but have the potential for substantial loss if the borrower defaults on

payment. Funds that invest in companies or markets with higher credit risk tend to be more volatile in the

short term. However, they may offer the potential of higher returns over the long term.

Distributions In Specie

A portion of a Fund’s portfolio may be invested in illiquid securities and instruments. There can be no

assurance that all of a Fund’s investments will be liquidated prior to the termination of the Fund and that

only cash will be distributed to its securityholders. The securities and instruments that securityholders may

receive on termination may not be readily marketable and may have to be held for an indefinite period of

time.

Interest Rate Risk

A Fund that invests in fixed income securities, such as bonds and money market instruments, is sensitive

to changes in interest rates. In general, when interest rates are rising, the value of these investments tends

to fall. When rates are falling, fixed income securities tend to increase in value. Fixed income securities

with longer terms to maturity are generally more sensitive to changes in interest rates.

Foreign Investment Risk

A Fund’s investment in non-Canadian and non-U.S. issuers may expose the Fund to unique risks compared

to investing in securities of Canadian or U.S. issuers, including, among others, greater market volatility

than Canadian or U.S. securities and less complete financial information than for Canadian or U.S. issuers.

In addition, adverse political, economic or social developments could undermine the value of a Fund’s

investments or prevent a Fund from realizing the full value of its investments. Finally, the value of the

currency of the country in which a Fund has invested could decline relative to the value of the Canadian

dollar.

Counterparty Risk

Due to the nature of some of the investments that a Fund may undertake, a Fund may rely on the ability of

the counterparty to the transaction to perform its obligations. In the event that a counterparty fails to

complete its obligations, the Fund will bear the risk of loss of the amount expected to be received under

options, forward contracts or securities lending agreements or other transactions in the event of the default

or bankruptcy of a counterparty.

Trading Price of ETF Shares/ETF Units

ETF Shares and ETF Units may trade in the market at a premium or discount to the NAV per ETF Share or

ETF Unit, as the case may be. There can be no assurance that the ETF Shares and ETF Units will trade at

prices that reflect their NAV. The trading price of the ETF Shares and ETF Units will fluctuate in

accordance with changes in a Fund’s NAV, as well as market supply and demand on the TSX (or such other

designated exchange on which the ETF Shares or ETF Units, as applicable, of a Fund may be traded from

time to time). However, given that generally only a Prescribed Number of Securities are issued to

Designated Brokers and Dealers, and that holders of a Prescribed Number of Securities (or an integral

multiple thereof) may redeem such ETF Shares or ETF Units, as the case may be, at their NAV, the Manager

54

believes that large discounts or premiums to the NAV of the ETF Shares or ETF Units, as applicable, should

not be sustained.

Additional Risks Relating to an Investment in Certain Funds

In addition to the general risk factors applicable to all of the Funds set forth above, there are certain

additional specific risk factors inherent in an investment in certain Funds, as indicated in the table below:

Risk Factors

Pu

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se D

iver

sifi

ed

Rea

l A

sset

Fu

nd

Pu

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se E

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an

ced

US

Eq

uit

y F

un

d

Pu

rpo

se M

ult

i-

Str

ate

gy

Ma

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Agriculture and Farming Industry Risk √ √ √ √

Capital Depreciation Risk √

Commodities Exchange Regulatory Risk √ √ √ √

Commodity Risk √ √ √ √

Debt Securities Risk √

Energy Risk √ √ √ √

Fund Corporation Risk √ √

Futures Contract Margin Risk √ √ √ √

Futures Contract Liquidity Risk √ √ √ √

Foreign Markets Risk √ √ √ √

Lack of Operating History √ √

Precious Metals Risk √ √ √ √

Agriculture and Farming Industry Risk

Certain Funds may be subject to a number of risks specific to the agricultural sector, such as: (a) changes

in demand for food or other agricultural products by end users or as inputs in various products, such as

ethanol and bio-diesel; (b) changes in the availability of food and other agricultural commodities; (c)

governmental policies such as taxes, tariffs, duties, subsidies and import and export restrictions; and (d)

legislative or regulatory developments relating to food safety and the environment. These factors interrelate

in complex ways, and the effect of one factor on a Fund and the value of its shares or units, as applicable,

may increase or reduce the effect of another factor.

Capital Depreciation Risk

The Fund may make distributions comprised, in whole or in part, of return of capital (these distributions

are separate from the income generated by the Fund). A return of capital distribution is a return of a portion

of an investor’s original investment and may, over time, result in the return of the entire amount of the

original investment to the investor. Return of capital distributions that are not reinvested in the Fund will

reduce the NAV of the Fund, which could reduce the Fund’s ability to generate future income.

55

Commodities Exchange Regulatory Risk

The commodity futures contracts that underlie certain Funds are subject to legal and regulatory regimes

that are in the process of changing in the U.S. and, in some cases, in other countries. For example, the

Commodity Futures Trading Commission (“CFTC”) is reviewing the regulation of commodity futures

trading in the U.S. and is considering the imposition of “speculative position limits” on the maximum net

long or net short position that any person may hold or control in particular futures contracts, and possible

exemptions, which may apply to and affect a Fund. If such limits were to apply to a Fund, they could

adversely affect the Fund’s ability to achieve its investment objectives. The implementation of position

limits by either the CFTC or Canadian regulators may, among other things: (a) restrict the Fund’s, as

applicable, ability to issue new shares or new units, as applicable; (b) affect the ability of the Fund or the

Investment Advisor to effect a rebalancing; (c) limit the extent to which parties can enter into hedging

transactions using commodity futures generally; and (d) affect the liquidity of the commodity futures

contracts underlying the strategies of the Fund.

Commodity Risk

Certain Funds provide exposure to the commodities markets, which have historically been more volatile

than other markets, including the broader equity market.

The value of commodity-linked derivative instruments may be affected by changes in interest rates or events

that affect a particular industry, such as changes in supply and demand relationships (whether actual,

perceived or anticipated), drought, floods, weather and other natural disasters, livestock disease,

technological developments, as well as embargoes, tariffs and other domestic and international political and

economic developments. The current or “spot” prices of an underlying physical commodity may affect, in

a volatile and inconsistent manner, the prices of futures contracts in respect of that commodity. The return

on a commodities investment is derived from fluctuations in commodities prices in addition to the shape of

the commodity futures curve over time. Assuming spot prices and the shape of the curve remain constant,

rolling futures will yield a positive return if prices are lower in the distant delivery months than in the

nearest delivery months (i.e., the curve is in “backwardation”) and a negative return if prices are higher in

the distant delivery months than in the nearest delivery months (i.e., the curve is in “contango”).

Debt Securities Risk

Investments in debt securities are subject to certain general investment risks in a manner similar to their

effect on equity investments. In addition to credit risk and interest rate risk described above, a number of

factors may cause the price of a debt security to decline. For investments in corporate debt securities, this

includes specific developments relating to the company and general financial, political and economic (other

than interest rate) conditions in the country in which the company operates. For government debt securities,

this includes general economic, financial and political conditions. The market value of a Fund will be

affected by changes in the prices of the debt securities it holds.

Energy Risk

Certain Funds may be subject to a number of risks specific to the energy sector, such as: (a) changes in

industrial, government and consumer demand, which will be affected by levels of industrial and commercial

activities that are associated with high levels of energy demand; (b) price changes in alternative sources of

energy; (c) disruptions in the supply chain or in the production or supply of energy sources; (d) adjustments

to inventories; (e) variations in production and shipping costs; and (f) costs associated with regulatory

compliance, including environmental regulations. These factors interrelate in complex ways, and the effect

56

of one factor on a Fund and the value of its shares or units, as applicable, may increase or reduce the effect

of another factor.

Fund Corporation Risk

Each PFC Fund is a separate class of shares of the Company and each class is available in more than one

series. Each class and series has its own fees and expenses which are tracked separately. Those fees and

expenses will be deducted in calculating the share value for that class or series thereby reducing the share

value. The liabilities of each of the PFC Funds are liabilities of the Company as a whole. If one class or

series is unable to pay its expenses or liabilities, the Company is legally responsible to pay those expenses

and as a result, the share value of the other classes or series may also be reduced. Similarly, if the liabilities

of a class of shares of the Company are greater than its assets, the other classes of shares of the Company

may be responsible for those liabilities.

A mutual fund corporation is permitted to flow through certain income to investors in the form of dividends.

These are capital gains and dividends from taxable Canadian corporations. However, a mutual fund

corporation cannot flow through other income including interest, trust income and foreign dividends. If this

type of income, calculated for the Company as a whole, is greater than the expenses of the Company, the

Company would become taxable. Purpose tracks the income and expenses of each Fund separately so that

if the Company becomes taxable, the Manager would usually allocate the tax to those Funds whose taxable

income exceeded expenses.

If the Company has taxable net income, this could be disadvantageous for two types of investors: (a)

investors in a Registered Plan and (b) investors with a lower marginal tax rate than the Company. Investors

in Registered Plans do not immediately pay income tax on income received, therefore if a trust earned

income it would distribute it, and the investors in a Registered Plan would not immediately pay income tax;

since the Company cannot distribute the income, investors in a Registered Plan will pay the income tax

indirectly. The corporate tax rate applicable to mutual fund corporations is higher than some personal

income tax rates, depending on the Province or Territory in which the investor resides and depending on

the investor’s marginal tax rate. As such, if the income is taxed inside the Company rather than distributed

to the investor (and the investor pays the tax), the investor may indirectly pay a higher rate of tax on that

income.

Futures Contract Margin Risk

Certain Funds invest in commodity futures contracts. Futures prices generally are extremely volatile.

Because of the low margin deposits normally required in futures trading, an extremely high degree of

leverage is common in a futures trading account. As a result, a relatively small price movement in a futures

contract may result in substantial losses. Similar to other leveraged investments, any purchase or sale of a

futures contract may result in losses in excess of the amount invested.

There is a risk that the assets of a Fund deposited as margin with a futures commission merchant may, in

the event of the bankruptcy of the futures commission merchant, be used to satisfy the claims of creditors

of the futures commission merchant, other than the Fund, including other clients of the futures commission

merchant. Under the terms of investor protection legislation in Canada, client assets held by an insolvent

futures commission merchant may be divided up, on a pro rata basis, among its clients.

Futures Contract Liquidity Risk

Futures contracts may not be liquid and their trading frequently involves high transaction costs. U.S. futures

exchanges have regulations that limit the magnitude of fluctuations that may occur in futures contract prices

57

during a single trading day. These limits are generally referred to as “daily price fluctuation limits” and the

maximum or minimum price on a contract on any given day as a result of these limits is referred to as a

“limit price”. Once the limit price is reached on a contract, no trades may be made at a price that is greater

or less than the limit price, as the case may be. In addition, the commodity markets are subject to temporary

distortions or other disruptions due to various factors, including a lack of liquidity in the markets, the

participation of speculators and government regulation and intervention. Certain exchanges, or the U.S.

CFTC, could suspend or terminate trading in a particular futures contract or contracts in order to address

market emergencies. The imposition of limit prices or trading suspensions may force the sale of a contract

at a disadvantageous price or time or preclude trading in the contract altogether. This could adversely affect

the NAV of the Fund and the market price of the Fund’s ETF Shares or ETF Units, as applicable, as well

as the Fund’s ability to meet subscription, exchange and redemption requests.

Foreign Markets Risk

Certain Funds may trade commodity futures contracts on commodities exchanges in the U.S. None of the

Canadian securities regulatory authorities or Canadian exchanges regulate activities of any foreign markets,

including the execution, delivery and clearing of transactions, or have the power to compel enforcement of

the rule of a foreign market or any applicable foreign law. Generally, any foreign transaction will be

governed by applicable foreign laws. This is true even if the foreign market is formally linked to a Canadian

market so that a position taken on a market may be liquidated by a transaction on another market. Moreover,

such laws or regulations will vary depending on the foreign country in which the transaction occurs. For

these reasons, entities such as the Funds that trade futures contracts may not be afforded certain of the

protective measures provided by Canadian legislation and the rules of Canadian exchanges. In particular,

funds received from customers for transactions may not be provided the same protection as funds received

in respect of transactions on Canadian exchanges.

Lack of Operating History

The New Purpose Funds are newly organized with no previous operating history. Although the New

Purpose Funds will, subject to fulfilling the TSX’s original listing requirements on or before July 26, 2019,

be listed on the TSX, there can be no assurance that an active public market for the units of the New Purpose

Funds will develop or be sustained.

Precious Metals Risk

Certain Funds may be subject to a number of risks specific to precious metals, such as: (a) changes in

industrial, government and consumer demand, including industrial and jewelry demand and the degree to

which governments, corporate and financial institutions and consumers hold precious metals, such as

physical gold, as a safe haven asset, which may be affected by the structure of and confidence in the global

monetary system or a rapid change in the value of other assets; (b) disruptions in the supply chain, from

mining to storage to smelting or refining; (c) adjustments to inventories; (d) variations in production costs,

including storage, labour and energy costs; (e) costs associated with regulatory compliance, including

environmental regulations; (f) interest rates and borrowing and lending rates relating to precious metals;

(g) currency exchange rates, including the relative strength of, and confidence in, exchange rates relating

to currencies in which precious metals prices are quoted; and (h) levels of economic growth and inflation.

These factors interrelate in complex ways, and the effect of one factor on a Fund and the value of its shares

or units, as applicable, may increase or reduce the effect of another factor.

58

Risk Ratings of the Funds

Purpose assigns fund risk ratings to each fund managed by it as an additional guide to help you decide

whether a fund is right for an investor. This information is only a guide. The Manager then determines the

risk rating for each fund in accordance with NI 81-102. The investment risk level of a fund is required to

be determined in accordance with a standardized risk classification methodology that is based on the

historical volatility of the fund as measured by the 10-year standard deviation of the returns of the fund.

Just as historical performance may not be indicative of future returns, a fund’s historical volatility may not

be indicative of its future volatility. Investors should be aware that other types of risk, both measurable and

non-measurable, also exist.

Standard deviation is a statistical measure used to estimate the dispersion of a set of data around the average

value of the data. In the context of investment returns, it measures the amount of variability of returns that

has historically occurred relative to the average return. The higher the standard deviation, the greater the

variability of returns it has experienced in the past.

Using this methodology, each fund is assigned an investment risk rating in one of the following categories:

(a) Low – for funds with a level of risk that is typically associated with investments in money

market funds and Canadian fixed income funds;

(b) Low to Medium – for funds with a level of risk that is typically associated with

investments in balanced funds and global and/or corporate fixed income funds;

(c) Medium – for funds with a level of risk that is typically associated with investments in

equity portfolios that are diversified among a number of large-capitalization Canadian

and/or international equity securities;

(d) Medium to High – for funds with a level of risk that is typically associated with

investments in equity funds that may concentrate their investments in specific regions or

in specific sectors of the economy; and

(e) High – for funds with a level of risk that is typically associated with investment in equity

portfolios that may concentrate their investments in specific regions or in specific sectors

of the economy where there is a substantial risk of loss (e.g., emerging markets and

precious metals).

A fund’s risk rating is determined by calculating its standard deviation for the most recent 10 years using

monthly returns and assuming the reinvestment of all income and capital gains distributions in additional

units of the fund. For those funds that do not have at least 10 years of performance history, the Manager

uses a reference index that reasonably approximates or, for a newly established fund, that is reasonably

expected to approximate, the standard deviation of the fund (or in certain cases a highly similar mutual fund

managed by us) as a proxy. There may be times when we believe this methodology produces a result that

does not reflect a fund’s risk based on other qualitative factors. As a result, the Manager may place the fund

in a higher risk rating category, as appropriate. Purpose reviews the risk rating for each fund on an annual

basis or if there has been a material change to a fund’s investment objectives or investment strategies.

A copy of the methodology used by Purpose to identify the investment risk levels of the Funds is available

on request, at no cost, by calling 1-877-789-1517, by emailing us at [email protected] or by writing

to us at 130 Adelaide Street West, Suite 1700, P.O. Box 83, Toronto, Ontario, M5H 3P5.

mailto:[email protected]

59

The risk ratings set forth in the table below do not necessarily correspond to an investor’s risk tolerance

assessment. Investors are advised to consult their financial advisor for advice regarding their personal

circumstances.

Fund Risk Rating

Purpose Diversified Real Asset Fund Medium

Purpose Enhanced US Equity Fund Medium to High

Purpose Multi-Strategy Market Neutral Fund Low to Medium

Purpose Alternative Yield Fund Low to Medium

Purpose Alternative Strategies Fund Low to Medium

The Purpose Diversified Real Asset Fund’s risk classification is based on the Fund’s returns and the return

of the following composite of market indices: 25% of the S&P/TSX Capped Materials Index, 25% of the

S&P/TSX Capped REIT Index, 25% of the S&P/TSX Capped Energy Index (CAD) and 25% of the MFC

Custom Global Agriculture TR Index (CAD). The S&P/TSX Capped Materials Sector Index is a modified

capitalization-weighted index, with equity weights which are capped at 25%. The index constituents are

derived from a subset stock pool of the securities included in the S&P/TSX Composite Index. The

S&P/TSX Capped REIT Index is a modified-market capitalization weighted index which represents a

subset of the broad-based composite index, in this case, the real estate income trusts of the Financials/Global

Industry Classification Standard (GICS) sector of the REIT marketplace. The S&P/TSX Capped Energy

Sector Index is a modified cap-weighted index, with equity weights which are capped at 25%. The index

constituents are derived from a subset stock pool of the securities included in the S&P/TSX Composite

Index. Sector classification is based on the GICS. The S&P GSCI Total Return Index is calculated primarily

on a world production weighted basis, comprised of the principal physical commodities futures contracts.

The Purpose Enhanced US Equity Fund’s risk classification is based on the Fund’s returns and the return

of the Credit Suisse 130/30 TR Index (USD). Credit Suisse 130/30 Total Return represents the holdings of

a 130/30 U.S. large-capitalization equity strategy. The index is rebalanced monthly and constituents are

chosen from the largest 500 U.S. market capitalization equities and their weights determined by a quant

scoring methodology and an optimizer.

The Purpose Multi-Strategy Market Neutral Fund’s risk classification is based on the Fund’s returns and

the return of the Hedge Fund Research HFRX Macro Multi Strategy Index. The Hedge Fund Research

HFRX Macro Multi Strategy Index employs components of both Discretionary and Systematic Macro

strategies (never exclusively one strategy). Strategies frequently contain proprietary trading influences, and

in some cases contain distinct, identifiable sub-strategies, such as equity hedge or equity market neutral, or

in some cases a number of sub-strategies are blended together without the capacity for portfolio level

disaggregation. Strategies employ an investment process which is predicated on a systematic, quantitative

evaluation of macroeconomic variables in which the portfolio positioning is predicated on convergence of

differentials between markets, not necessarily highly correlated with each other, but currently diverging

from their historical levels of correlation. Strategies focus on fundamental relationships across geographic

areas of focus both inter and intra-asset classes, and typical holding periods are longer than trend following

or discretionary strategies.

The Purpose Alternative Yield Fund’s risk classification is based on the fund’s returns and the return of the

following composite of market indices: 25% of the CBOE S&P 500 BuyWrite Index (C$), 25% of the First

Trust Composite Closed-End Fund Total Return Index (C$), 25% of the FTSE NAREIT® All Mortgage

Capped Index and 25% of S&P 500 Dividend Aristocrats Index (C$). The CBOE S&P 500 BuyWrite Index

(C$) is a benchmark index designed to track the performance of a hypothetical buy-write strategy on the

S&P 500 Index. The First Trust Composite Closed-End Fund Total Return Index (C$) is an index of the

municipal, taxable fixed income and equity indexes which is intended to provide a capitalization weighted

60

representation of the entire U.S. closed-end fund universe. The FTSE NAREIT All Mortgage Capped Index

is designed to provide the most comprehensive assessment of overall industry performance and includes all

tax-qualified real estate investment trusts (REITs) that are listed on the New York Stock Exchange, the

NYSE Arca or the NASDAQ National Market List. The index aims to achieve no greater than a 22.5% cap

in any security and for all securities above 5% to not exceed 45%. The S&P 500 Dividend Aristocrats Index

(C$) consists of constituents from the S&P 500 Index which have increased their dividend payouts for 25

consecutive years or more. The companies that comprise the index span all eleven sectors within the S&P

500 Index and therefore encompass both large-capitalization growth and large-capitalization value

companies.

The Purpose Alternative Strategies Fund’s risk classification is based on the fund’s returns and the return

of the HFRX Macro Multi-Strategy Index. The HFRX Macro Multi-Strategy Index invests in hedged funds

which have at least $50 million under management, been actively trading for at least 24 months and are

managed by a manager that provides transparency and passes extensive qualitative screening. The HFRX

Macro Multi-Strategy Index employs components of both discretionary and systematic macro strategies,

but neither exclusively. Strategies frequently contain proprietary trading influences, and in some cases

contain distinct, identifiable sub-strategies, such as equity hedge or equity market neutral, or in some cases

a number of sub-strategies are blended together without the capacity for portfolio level disaggregation.

Strategies employ an investment process which is predicated on a systematic, quantitative evaluation of

macroeconomic variables in which the portfolio positioning is predicated on convergence of differentials

between markets, not necessarily highly correlated with each other, but currently diverging from their

historical levels of correlation. Strategies focus on fundamental relationships across geographic areas of

focus both inter and intra-asset classes, and typical holding periods are longer than trend following or

discretionary strategies.

DIVIDEND/DISTRIBUTION POLICY

PFC Funds

The dividend policy of the Company is to pay cash dividends on the shares of the PFC Funds as set forth

in the following table below, if at all.

PFC Fund Frequency of Distributions

Purpose Diversified Real Asset Fund Quarterly, if any

Purpose Enhanced US Equity Fund Annually, if any

The Company will also pay a special year-end dividend where the Company has net taxable capital gains

upon which it would otherwise be subject to tax or where the Company needs to pay a dividend in order to

recover refundable tax not otherwise recoverable upon payment of such cash dividends.

While the principal sources of income of the Company are expected to include taxable capital gains as well

as dividends from taxable Canadian corporations, to the extent that the Company earns net income, after

expenses, from other sources, including dividends from non-Canadian sources and interest income on

interim investment of its reserves, the Company will be subject to income tax on such income and no refund

of such tax will be available if available expenses are not enough to offset income.

Given the investment and dividend policy of the Company and taking into account the deduction of

expenses and taxable dividends on shares of taxable Canadian corporations, the Company does not expect

to be subject appreciable amounts of non-refundable Canadian income tax. The Company does intend to

utilize various methods to limit the tax impact on the Company of non-refundable Canadian income tax.

61

Purpose Trust Funds

The distribution policy of the Purpose Trust Funds is to pay cash distributions on the units of the Purpose

Trust Funds as set forth in the following table below, if at all.

Purpose Trust Fund Frequency of Distributions

Purpose Multi-Strategy Market Neutral Fund Annually, if any

Purpose Alternative Yield Fund Monthly, if any

Purpose Alternative Strategies Fund Annually, if any

Cash distributions on units of the Purpose Trust Funds are expected to be paid primarily out of dividends

or distributions, and other income or gains, received by the Fund less the expenses of the Fund, but may

also consist of non-taxable amounts including return of capital, which may be paid in the Manager’s sole

discretion. To the extent that the expenses of a Purpose Trust Fund exceed the income generated by the

Fund in any given year, it is not expected that an annual distribution will be paid.

On an annual basis, each Purpose Trust Fund will ensure that its income (including income received from

special distributions on securities held by the Fund) and net realized capital gains, if any, have been

distributed to unitholders to such an extent that the Fund will not be liable for ordinary income tax thereon.

To the extent that a Purpose Trust Fund has not distributed the full amount of its net income or capital gains

in any year, the difference between such amount and the amount actually distributed by the Fund will be

paid as a “reinvested distribution”. Reinvested distributions on units of a Purpose Trust Fund, net of any

required withholding taxes, will be reinvested automatically in additional units of the Fund at a price equal

to the NAV per unit of the Fund and the units will be immediately consolidated such that the number of

outstanding units following the distribution will equal the number of units outstanding prior to the

distribution. The tax treatment to unitholders of reinvested distributions is discussed under the heading

“Income Tax Considerations – Taxation of Unitholders”.

In addition to the distributions described above, each Purpose Trust Fund may from time to time pay

additional distributions on its units, including without restriction in connection with a special distribution

or in connection with returns of capital.

Dividend/Distribution Reinvestment Plan


The Funds have adopted a Reinvestment Plan, which provides that a holder of an ETF Share or ETF Unit

(an “ETF Plan Participant”) may elect to automatically reinvest all dividends paid on the ETF Shares or

ETF Units, as the case may be, held by that ETF Plan Participant in additional ETF Shares or ETF Units,

as applicable (“ETF Plan Securities”) of the Funds in accordance with the terms of the Reinvestment Plan

and the dividend reinvestment agency agreement or distribution reinvestment agency agreement, as the case

may be, between the Manager, on behalf of the Funds, and the Plan Agent. The key terms of the

Reinvestment Plan are as described below.

Holders of ETF Shares or ETF Units who are not residents of Canada may not participate in the

Reinvestment Plan and any holder of an ETF Share or ETF Unit, as the case may be, who ceases to be a

resident of Canada will be required to terminate its participation in the Reinvestment Plan. The Funds will

not be required to purchase ETF Plan Securities if such purchase would be illegal.

62

A holder of ETF Shares and/or ETF Units who wishes to enroll in the Reinvestment Plan as of a particular

Distribution Record Date should notify the CDS Participant through which the holder holds its ETF Shares

or ETF Units, as the case may be, sufficiently in advance of that Distribution Record Date to allow such

CDS Participant to notify CDS by 5:00 p.m. (Toronto time) on the Distribution Record Date. The Manager

reserves the right to reject any request for enrolment in the Reinvestment Plan.

Dividends that ETF Plan Participants are due to receive will be used to purchase ETF Shares or ETF Units,

as the case may be, on behalf of such ETF Plan Participants in the market.

No fractional ETF Shares or ETF Units will be purchased under the Reinvestment Plan. Any funds

remaining after the purchase of whole ETF Shares or ETF Units will be credited to the ETF Plan Participant

via its CDS Participant in lieu of fractional ETF Share or ETF Units, as applicable.

The automatic reinvestment of the dividends or distributions, as the case may be, under the Reinvestment

Plan will not relieve ETF Plan Participants of any income tax applicable to such dividends or distributions,

as applicable. See “Income Tax Considerations – PFC Funds” and “Income Tax Considerations – Taxation

of Unitholders”.

ETF Plan Participants may voluntarily terminate their participation in the Reinvestment Plan as of a

particular Distribution Record Date by notifying their CDS Participant sufficiently in advance of that

Distribution Record Date. ETF Plan Participants should contact their CDS Participant to obtain details of

the appropriate procedures for terminating their participation in the Reinvestment Plan. Beginning on the

first Distribution Payment Date after such notice is received from an ETF Plan Participant and accepted by

a CDS Participant, distributions to such ETF Plan Participant will be made in cash. Any expenses associated

with the preparation and delivery of such termination notice will be borne by the ETF Plan Participant

exercising its right to terminate participation in the Reinvestment Plan. The Manager may terminate the

Reinvestment Plan, in its sole discretion, upon not less than 30 days’ notice to: (a) the CDS Participants

through which the ETF Plan Participants hold their ETF Shares or ETF Units, as the case may be; (b) the

Plan Agent; and (c) if necessary, the TSX (or such other designated exchanges on which the ETF Shares or

ETF Units, as applicable, of a Fund may be listed from time to time).

The Manager may amend, modify or suspend the Reinvestment Plan at any time in its sole discretion,

provided that it gives notice of that amendment, modification or suspension to: (a) the CDS Participants

through which the ETF Plan Participants hold their ETF Shares or ETF Units, as the case may be; (b) the

Plan Agent; and (c) if necessary, the TSX (or such other designated exchanges on which the ETF Shares or

ETF Units, as applicable, of a Fund may be listed from time to time).


Distributions payable on Mutual Fund Shares and Mutual Fund Units of the Funds are automatically

reinvested in additional Mutual Fund Shares or Mutual Fund Units, as applicable. Holders of Mutual Fund

Shares or Mutual Fund Units, as the case may be, who wish to receive cash as of a particular Distribution

Record Date should speak with their broker, dealer or investment advisor for details.

Pre-Authorized Cash Contribution


The Manager may, in its discretion, offer ETF Plan Participants the option to make pre-authorized cash

contributions under the Reinvestment Plan by notifying their CDS Participant sufficiently in advance to

allow such CDS Participant to notify the Plan Agent by 5:00 p.m. (Toronto time) at least ten Business Days

63

before the last Business Day of that month. An ETF Plan Participant may invest a minimum of $100 and a

maximum of $5,000 per pre-authorized cash contribution no more frequently than monthly. The Manager

reserves the right to reject any request for pre-authorized cash contributions.

Distributions due to ETF Plan Participants, along with any pre-authorized cash contributions, will be

applied, on behalf of ETF Plan Participants, to purchase ETF Shares or ETF Units, as the case may be, in

the market. ETF Plan Securities will be allocated pro rata based on the number of ETF Shares or ETF

Units, as the case may be, held by ETF Plan Participants. ETF Plan Securities will be credited for the benefit

of ETF Plan Participants to the account of the CDS Participant through whom that ETF Plan Participant

holds ETF Shares or ETF Units, as the case may be.

If an ETF Plan Participant switches ETF Shares of one Purpose Corporate Fund for ETF Shares of another

Purpose Corporate Fund and participates in a pre-authorized cash contribution plan, the ETF Plan

Participant must inform their CDS Participant of the change sufficiently in advance to allow the CDS

Participant to notify the Plan Agent of the change by 5:00 p.m. (Toronto time) at least ten Business Days

before the last Business Day of the month or the ETF Plan Participant will receive the ETF Shares originally

selected. See “Redemption, Exchange and Switches of Securities – Switching Shares”.


Holders of Mutual Fund Shares and/or Mutual Fund Units (other than holders of Series XA Shares and

Series XF Shares) may also make pre-authorized cash contributions under the Reinvestment Plan by

notifying their broker, dealer or investment advisor sufficiently in advance of the Distribution Payment

Date such that the broker, dealer or investment advisor is able to provide at least five Business Days’ notice

to the Manager prior to the applicable Distribution Payment Date to set up a pre-authorized cash

contribution plan. An investor who wishes to purchase Mutual Fund Shares (other than Series I Shares) or

Mutual Fund Units (other than Class I Units) by way of pre-authorized cash contributions under the

Reinvestment Plan must subscribe for a minimum additional investment of $100. Holders of Mutual Fund

Shares or Mutual Fund Units who wish to make pre-authorized cash contributions under the Reinvestment

Plan should speak with their broker, dealer or investment advisor for further details.

Pre-authorized cash contributions under the Reinvestment Plan are also available under the U.S. dollar

purchase option for Mutual Fund Shares and Mutual Fund Units.

Systematic Withdrawal Plan


Under the Reinvestment Plan, holders of ETF Shares and/or ETF Units, as the case may be, will also be

able to elect to systematically withdraw shares or units, as applicable, by selling a specific dollar amount

of ETF Shares or ETF Units, as applicable, (in minimum amounts of $100 and maximum amounts of

$5,000) owned by such holder in respect of each subsequent Distribution Payment Date. A holder of ETF

Shares and/or ETF Units, as the case may be, may elect to sell ETF Share or ETF Units, as applicable, by

notifying the Plan Agent via the applicable CDS Participant through which such holder holds its ETF Share

or ETF Units, as the case may be, of the securityholder’s intention to so sell ETF Shares or ETF Units, as

the case may be. In this regard, the CDS Participant must, on behalf of such holder, (a) provide a systematic

withdrawal notice directly to the Plan Agent that the securityholder wishes to sell ETF Shares or ETF Units,

as applicable, in this manner until the relevant Fund is otherwise notified no later than 5:00 p.m. (Toronto

time) on the applicable Distribution Record Date for which the securityholder no longer wishes to sell ETF

Shares or ETF Units, as applicable, or there remain no further ETF Share or ETF Units, as the case may be,

64

to be sold on behalf of such securityholder, whichever comes first and (b) specify the specified dollar

amount of ETF Shares or ETF Units to be sold in respect of each subsequent Distribution Payment Date.

A holder of ETF Shares and/or ETF Units who makes pre-authorized cash contributions may not deliver a

systematic withdrawal notice under the Reinvestment Plan.


Holders of Mutual Fund Shares and/or Mutual Fund Units will also be able to elect to systematically

withdraw shares by selling a specific dollar amount of shares or units, as the case may be, (in minimum

amounts of $100 weekly, bi-weekly, semi-monthly, monthly, quarterly, semi-annually or annually,

depending on the kind of account such securityholder has) owned by such securityholder in respect of each

subsequent Distribution Payment Date. Holders of Mutual Funds Shares or Mutual Fund Units who wish

to open a withdrawal plan must notify their broker, dealer or investment advisor sufficiently in advance of

the Distribution Payment Date such that the broker, dealer or investment advisor is able to provide at least

five Business Days’ notice to the Manager prior to the applicable Distribution Payment Date to set up the

regular withdrawal plan. Holders of Mutual Fund Shares or Mutual Fund Units who wish to open a

systematic withdrawal plan with the Manager should speak with their broker, dealer or investment advisor

for further details.

PURCHASES OF SHARES/UNITS

Investors and their investment professional, if applicable, must determine which Fund or series or class, as

applicable, of a Fund is appropriate to invest in. Different series or classes may have different minimum

investment levels and may require investors to pay different fees. The choice of different purchase options

requires investors to pay different fees and expenses and affects the amount of compensation received by

an investor’s dealer. See “Fees and Expenses”.

Initial Investment in the New Purpose Funds

In compliance with NI 81‑102, neither New Purpose Fund will issue units to the public until orders

aggregating not less than $500,000 have been received and accepted by the New Purpose Fund from

investors other than the Manager or its directors, officers or securityholders.

Continuous Distribution

The ETF Shares, Mutual Fund Shares, ETF Units and Mutual Fund Units of the Funds are being issued and

distributed on a continuous basis and there is no maximum number of ETF Shares, Mutual Fund Shares,

ETF Units or Mutual Fund Units that may be issued.

Designated Brokers

The Manager, on behalf of each of the Funds and the Company (in the case of the PFC Funds only), has

entered or will enter into an agreement with a Designated Broker (a “Designated Broker Agreement”)

pursuant to which the Designated Broker agrees to perform certain duties relating to the Fund with respect

to the ETF Shares or ETF Units, as applicable, including, without limitation: (a) to subscribe for a sufficient

number of ETF Shares or ETF Units, as applicable, to satisfy the TSX’s (or such other designated exchange

on which the ETF Shares or ETF Units, as applicable, of the Fund may be listed from time to time) original

listing requirements; (b) to subscribe for ETF Shares or ETF Units, as applicable, on an ongoing basis in

connection with the rebalancing of and adjustments to the portfolio of the Fund; and (c) to post a liquid

two-way market for the trading of ETF Shares or ETF Units, as applicable, on the TSX (or such other

65

designated exchanges on which the ETF Shares or ETF Units, as applicable, of the Fund may be traded

from time to time). The Manager may, in its discretion from time to time, reimburse the Designated Broker

for certain expenses incurred by the Designated Broker in performing these duties.

The Designated Broker Agreement provides or will provide that the Manager may from time to time require

the Designated Broker to subscribe for ETF Shares or ETF Units, as the case may be, of a Fund for cash in

a dollar amount not to exceed 0.30% of the NAV of the ETF Shares or ETF Units, as applicable of the Fund

per quarter. The number of ETF Shares or ETF Units, as the case may be, issued will be the subscription

amount divided by the NAV per ETF Share or ETF Unit, as the case may be, next determined following

the delivery by the Manager of a subscription notice to the Designated Broker. Payment for the ETF Shares

or ETF Units, as applicable, must be made by the Designated Broker, and the ETF Shares or ETF Units, as

applicable, will be issued by no later than the second Trading Day after the subscription notice has been

delivered.

Issuance of ETF Shares/ETF Units

To Designated Brokers and Dealers

All orders to purchase ETF Shares or ETF Units directly from a Fund must be placed by Designated Brokers

or Dealers. The Manager reserves the absolute right to reject any subscription order placed by a Designated

Broker or Dealer. No fees will be payable by a Fund to a Designated Broker or Dealer in connection with

the issuance of ETF Shares or ETF Units, as the case may be. On the issuance of ETF Shares and ETF

Units, the Manager may, in its discretion, charge an administrative fee to a Designated Broker or Dealer to

offset the expenses (including any applicable additional listing fees) incurred in issuing the ETF Shares or

ETF Units, as the case may be.

On any Trading Day, a Designated Broker or Dealer may place a subscription order for the Prescribed

Number of Securities (or an integral multiple thereof) of a Fund. If a subscription order is received by the

Fund by 9:00 a.m. (Toronto time) on a Trading Day (or such later time on such Trading Day as the Manager

may permit), the Fund will issue to the Designated Broker or Dealer the Prescribed Number of Securities

(or an integral multiple thereof) by no later than the second Trading Day following the effective date of the

subscription order or such other day as mutually agreed between the Manager and the Designated Broker

or Dealer, provided that payment for such ETF Shares or ETF Units, as the case may be, has been received.

For each Prescribed Number of Securities issued, a Designated Broker or Dealer must deliver payment

consisting of, in the Manager’s discretion: (a) a Basket of Securities and cash in an amount sufficient so

that the value of the securities and the cash received is equal to the NAV of the ETF Shares or ETF Units,

as the case may be, of the Fund next determined following the receipt of the subscription order and cash

subscription fee, if applicable; (b) cash in an amount equal to the NAV of the ETF Shares or ETF Units, as

the case may be, of the Fund next determined following the receipt of the subscription order and cash

subscription fee, if applicable; or (c) a combination of securities and cash, as determined by the Manager,

in an amount sufficient so that the value of the securities and cash received is equal to the NAV of the ETF

Shares or ETF Units, as the case may be, of the Fund next determined following the receipt of the

subscription order prior to 4:00 p.m. (Toronto time) or such other time as indicated on the website for the

Funds and cash subscription fee, if applicable.

The Manager may, in its discretion, increase or decrease the Prescribed Number of Securities from time to

time.

66

To Designated Brokers in Special Circumstances

ETF Shares or ETF Units, as applicable, may be issued by a Fund to Designated Brokers in connection with

the rebalancing of and adjustments to the Fund or its portfolio when cash redemptions of ETF Shares or

ETF Units, as applicable, occur as described below under “Redemption, Exchange and Switches of

Securities – Redemption of Securities for Cash”.

Issuance of Mutual Fund Shares/Mutual Fund Units

Series A Shares/Class A Units

Series A Shares and Class A Units are available to all investors through authorized dealers. The Series A

Shares and Class A Units may be either Canadian or U.S. dollar denominated.

Series F Shares /Class F Units

Series F Shares and Class F Units are available to investors who have fee based accounts with their dealer.

The Manager has designed the Series F Shares and Class F Units to offer investors an alternative means of

paying their dealer for investment advice and other services. Instead of paying sales charges, investors

buying Series F Shares or Class F Units pay fees to their dealer for investment advice and other services.

The Manager does not pay any commissions to dealers in respect of the Series F Shares and Class F Units

which allows it to charge a lower management fee. The Series F Shares and Class F Units may be either

Canadian or U.S. dollar denominated.

If a securityholder ceases to be eligible to hold Series F Shares or Class F Units of a Fund, as the case may

be, the Manager may switch a securityholder’s Series F Shares or Class F Units, as applicable into Series

A Shares or Class A Units, as applicable, of the Fund after providing the securityholder with 5 days’ notice,

unless the securityholder notifies the Manager during the notice period and the Manager agrees that such

securityholder is once again eligible to hold Series F Shares or Class F Units, as applicable. Securityholders

may be charged a sales commission in connection with the switch by their dealer.

Series I Shares/Class I Units

Series I Shares and Class I Units are available to institutional investors or to other investors on a case-by-

case basis, in the Manager’s discretion. The Manager does not pay any commissions to dealers in respect

of the Series I Shares and Class I Units. If a securityholder ceases to be eligible to hold Series I Shares or

Class I Units of a Fund, as the case may be, the Manager may switch a securityholder’s Series I Shares or

Class I Units, as applicable, into Series A Shares or Class A Units, as applicable of the Fund after providing

the securityholder with 5 days’ notice, unless the securityholder notifies the Manager during the notice

period and the Manager agrees that the securityholder is once again eligible to hold Series I Shares or Class

I Units, as applicable. Securityholders may be charged a sales commission in connection with the switch

by their dealer. The Series I Shares and Class I Units may be either Canadian or U.S. dollar denominated.

Series D Shares/Class D Units

Series D Shares and Class D Units are available to investors who have an account with an eligible online

or other discount brokerage firm (a “discount broker”). Generally, discount brokers do not provide

investment advice or recommendations to their clients. There are no sales charges paid to discount brokers

or the Manager when an investor purchases Series D Shares or Class D Units. Certain discount brokers do

not charge brokerage commissions when investors purchase or sell Series D Shares or Class D Units

67

however, investors should confirm this with their discount broker. The Series D Shares and Class D Units

may be either Canadian or U.S. dollar denominated.

If a securityholder ceases to be eligible to hold Series D Shares or Class D Units as the case may be, the

Manager may switch a securityholder’s Series D Shares or Class D Units, as applicable, into Series A

Shares or Class A Units, as applicable, of the Fund after providing the securityholder with 5 days’ notice,

unless the securityholder notifies the Manager during the notice period and the Manager agrees that such

securityholder is once again eligible to hold Series D Shares or Class D Units, as applicable. Securityholders

may be charged a sales commission in connection with the switch by their dealer.

Series XA Shares and Series XF Shares

Series XA Shares and Series XF Shares are available to investors who wish to acquire shares of a Purpose

Corporate Fund by exchange eligible shares of Canadian or U.S. public companies. To redeem Series XA

Shares or Series XF Shares, a shareholder must switch into a separate series of shares of the Purpose In-

Kind Exchange Fund. The Purpose In-Kind Exchange Fund is a separate fund that is a class of shares of

the Company which offers one or more series of shares on a prospectus exempt basis including to accredited

investors. Series XA Shares and Series XF Shares are Canadian dollar denominated.

Initial Investment

An investment in Mutual Fund Shares and Mutual Fund Units of the Funds requires securityholders to

invest and maintain a minimum balance. The table below outlines the minimums along with the minimum

requirements for additional investments, pre-authorized purchase plans and redemptions of Series A Shares,

Series F Shares, Series I Shares, Series D Shares, Series XA Shares, Series XF Shares, Class A Units, Class

F Units, Class I Units and Class D Units:

Series/Class

Minimum

Balance(1)

Minimum Additional

Investments/Pre-

authorized purchase

plans/Redemptions(2)(3)

A………………………………………………… $5,000 $100

F…………………………………………………. $5,000 $100

I………………………………………………….. N/A N/A

D…………………………………………………. $5,000 $100

XA…………………………………………………. $5,000 $100

XF…………………………………………………. $5,000 $100 Notes:

(1) Amounts in Canadian and U.S. dollars, as applicable. (2) Investors purchasing through dealers may be subject to higher minimum initial or additional investment/redemption amounts.

(3) Minimums are per transaction.


If a securityholder’s balance falls below the minimum required balance for a series or class, as the case may

be, or if a securityholder otherwise becomes ineligible to hold a particular series or class, as applicable, the

Manager may redeem or switch such securityholder’s shares or units, as applicable. Where a securityholder

is or becomes a citizen or resident of the U.S. or a resident of any other foreign country, the Manager may

require such securityholder to redeem its shares or units, as the case may be, if its participation has the

potential to cause adverse regulatory or tax consequences for a Fund or other securityholders of the Fund.

68

The Manager may redeem a securityholder’s shares or units, as applicable if it is permitted or required to

do so, including in connection with the termination of the Fund, in accordance with applicable law. If the

Manager redeems or switches a securityholder’s shares or units, the effect will be the same as if the

securityholder initiated the transaction. For redemptions in non-registered accounts, the Manager may

transfer the proceeds to the securityholder, and for redemptions in Registered Plans, the Manager may

transfer the proceeds to a registered savings deposit within the plan. The Manager will not give the

securityholder or the securityholder’s dealer notice prior to taking any action.

For the Manager to act on an order to buy, redeem shares or units or switch shares, the branch, telephone

salesperson or dealer must send the order to Purpose on the same day it is received before 4:00 p.m.

(Toronto time) or such other time as indicated on the website for the Funds (“order cut-off time”) and

assume all associated costs.

When an investor places its order through a financial advisor, the financial advisor will forward the order

to the Manager. If the Manager receives an order for shares or units before the order cut-off time, the

investor’s order will be processed using that day’s NAV. A separate NAV is calculated for each series of

shares or class of units of the Funds. If the Manager receives an order from an investor after the order cut-

off time, the investor’s order will be processed using the next Business Day’s NAV. If the Manager

determines that the NAV will be calculated at a time other than after the usual closing time of the TSX, the

NAV paid or received will be determined relative to that time. A dealer may establish earlier cut-off times.

Investors should check with their dealer for details.

If the Manager does not receive payment in full, it will cancel an investor’s order and redeem the shares or

units, as applicable, including any securities the investor bought through a switch. If the Manager redeems

the shares or units for more than the value for which they were issued, the difference will go to the applicable

Fund. If the Manager redeems the shares or units for less than the value for which they were issued, the

Manager will pay the difference to the applicable Fund and collect this amount, plus the cost of doing so,

from such investor’s dealer. Investors may be required to reimburse their dealers for the amount paid if

their dealer suffers a loss as a result.

The Manager has the right to refuse any order to buy or switch shares or units. The Manager must

do so within one Business Day from the time it receives the order. If the Manager refuses an investor’s

order to buy or switch, it will immediately return any monies it received with the investor’s order.

Buying and Selling Securities


Investors are able to buy or sell ETF Shares and ETF Units of the Funds through registered brokers and

dealers in the Province or Territory where the investor resides. Investors may incur customary brokerage

commissions in buying or selling ETF Shares or ETF Units of a Fund. The Funds issue ETF Shares or ETF

Units, as applicable, directly to the Designated Brokers and Dealers.

From time to time as may be agreed by a Fund and the Designated Brokers and Dealers, the Designated

Brokers and Dealers may agree to accept Constituent Securities as payment for ETF Shares or ETF Units,

as the case may be, from prospective investors. For a discussion regarding switching ETF Shares, see

“Redemption, Exchange and Switches of Securities – Switching ETF Shares”.

69


Investors are able to buy or sell Mutual Fund Shares and Mutual Fund Units of the Funds through registered

brokers and dealers in the Province or Territory where the investor resides. Investors may incur customary

brokerage commissions in buying or selling Mutual Fund Shares and Mutual Fund Units of the Funds. For

a discussion regarding switching Mutual Fund Shares, see “Redemption, Exchange and Switches of

Securities”.

U.S. Dollar Purchase Option


Mutual Fund Shares of the PFC Funds and the Mutual Fund Units of the Purpose Trust Funds may also be

purchased in U.S. dollars.

Special Considerations for ETF Shares/ETF Units

The provisions of the so-called “early warning” requirements set out in Canadian securities legislation do

not apply in connection with the acquisition of ETF Shares or ETF Units. The Funds obtained exemptive

relief from the securities regulatory authorities to permit the holders of ETF Shares or ETF Units to acquire

more than 20% of the ETF Shares or ETF Funds of any Purpose Fund (including the Funds) through

purchases on a stock exchange without regard to the take-over bid requirements of Canadian securities

legislation, provided that any such holder, and any person acting jointly or in concert with the holder,

undertakes to the Manager not to vote more than 20% of the ETF Shares or ETF Units, as the case may be,

of that Purpose Fund at any meeting of securityholders.

Non-Resident Securityholders

PFC Funds

At no time may: (a) non-residents of Canada; (b) partnerships that are not Canadian partnerships; or (c) a

combination of non-residents of Canada and such partnerships (all as defined in the Tax Act), be the

beneficial owners of a majority of the shares of the Company. The Manager may require declarations as to

the jurisdictions in which a beneficial owner of shares is resident and, if a partnership, its status as a

Canadian partnership. If the Manager becomes aware, as a result of requiring such declarations as to

beneficial ownership or otherwise, that the beneficial owners of 40% of the shares of the Company then

outstanding are, or may be, non-residents and/or partnerships that are not Canadian partnerships, or that

such a situation is imminent, the Manager may make a public announcement thereof. If the Manager

determines that more than 40% of such shares are beneficially held by non-residents and/or partnerships

that are not Canadian partnerships, the Manager may send a notice to such non-resident shareholders and

partnerships, chosen in inverse order to the order of acquisition or in such manner as the Manager may

consider equitable and practicable, requiring them to sell their shares or a portion thereof within a specified

period of not less than 30 days. If the shareholders receiving such notice have not sold the specified number

of shares or provided the Manager with satisfactory evidence that they are not non-residents or partnerships

other than Canadian partnerships within such period, the Manager may on behalf of such shareholders sell

such shares and, in the interim, shall suspend the voting and distribution rights attached to such shares.

Upon such sale, the affected holders shall cease to be beneficial holders of shares and their rights shall be

limited to receiving the net proceeds of sale of such shares.

Notwithstanding the foregoing, the Manager may determine not to take any of the actions described above

if the Manager has been advised by legal counsel that the failure to take any of such actions would not

70

adversely impact the status of the Company as a mutual fund corporation for purposes of the Tax Act or,

alternatively, may take such other action or actions as may be necessary to maintain the status of the

Company as a mutual fund corporation for purposes of the Tax Act.

Purpose Trust Funds

At no time may: (a) non-residents of Canada; (b) partnerships that are not Canadian partnerships; or (c) a

combination of non-residents of Canada and such partnerships (all as defined in the Tax Act), be the

beneficial owners of a majority of the units of a Purpose Trust Fund. The Manager may require declarations

as to the jurisdictions in which a beneficial owner of units is resident and, if a partnership, its status as a

Canadian partnership. If the Manager becomes aware, as a result of requiring such declarations as to

beneficial ownership or otherwise, that the beneficial owners of 40% of the units of a Purpose Trust Fund

then outstanding are, or may be, non-residents and/or partnerships that are not Canadian partnerships, or

that such a situation is imminent, the Manager may make a public announcement thereof. If the Manager

determines that more than 40% of such units are beneficially held by non-residents and/or partnerships that

are not Canadian partnerships, the Manager may send a notice to such non-resident securityholders and

partnerships, chosen in inverse order to the order of acquisition or in such manner as the Manager may

consider equitable and practicable, requiring them to sell their units or a portion thereof within a specified

period of not less than 30 days. If the securityholders receiving such notice have not sold the specified

number of units or provided the Manager with satisfactory evidence that they are not non-residents or

partnerships other than Canadian partnerships within such period, the Manager may on behalf of such

securityholders sell such units and, in the interim, shall suspend the voting and dividend rights attached to

such units. Upon such sale, the affected holders shall cease to be beneficial holders of units and their rights

shall be limited to receiving the net proceeds of sale of such units.

Notwithstanding the foregoing, the Manager may determine not to take any of the actions described above

if the Manager has been advised by legal counsel that the failure to take any of such actions would not

adversely impact the status of a Purpose Trust Fund as a mutual fund trust for purposes of the Tax Act or,

alternatively, may take such other action or actions as may be necessary to maintain the status of a Purpose

Trust Fund as a mutual fund trust for purposes of the Tax Act.

Registration and Transfer through CDS – ETF Shares/ETF Units

Registration of interests in, and transfers of, ETF Shares and ETF Units, will be made only through CDS.

ETF Shares and ETF Units may be purchased, transferred and surrendered for exchange or redemption only

through a CDS Participant. All rights of an owner of ETF Shares or ETF Units, as the case may be, must

be exercised through, and all payments or other property to which such owner is entitled will be made or

delivered by, CDS or the CDS Participant through which the owner holds such ETF Shares or ETF Units.

Upon purchase of any ETF Shares or ETF Units the owner will receive only the customary confirmation;

physical certificates evidencing ownership will not be issued. References in this prospectus to a holder of

ETF Shares and/or ETF Units mean, unless the context otherwise requires, the beneficial owner of such

ETF Shares or ETF Units, as applicable.

Neither the Funds, the Company nor the Manager will have any liability for: (a) records maintained by CDS

relating to the beneficial interests in the ETF Shares and the ETF Units or the book entry accounts

maintained by CDS; (b) maintaining, supervising or reviewing any records relating to such beneficial

ownership interests; or (c) any advice or representation made or given by CDS and made or given with

respect to the rules and regulations of CDS or any action taken by CDS or at the direction of the CDS

Participants.

71

The ability of a beneficial owner of ETF Shares or ETF Units, as the case may be, to pledge such ETF

Shares or ETF Units, as applicable, or otherwise take action with respect to such owner’s interest in such

ETF Shares or ETF Units, as applicable (other than through a CDS Participant) may be limited due to the

lack of a physical certificate.

The Funds have the option to terminate registration of the ETF Shares and/or ETF Units through the book-

based system in which case certificates for ETF Shares or ETF Units, as the case may be, in fully registered

form will be issued to beneficial owners of such ETF Shares or ETF Units, as applicable, to their nominees.

REDEMPTION, EXCHANGE AND SWITCHES OF SECURITIES

Redemption of Securities for Cash


On any Trading Day, holders of ETF Shares or ETF Units, as the case may be, may redeem ETF Shares or

ETF Units, as applicable, of a Fund for cash at a redemption price per ETF Share or ETF Unit, as applicable,

equal to the lesser of (a) (i) in respect of the ETF Shares, 95% of the closing price for the ETF Shares on

the TSX and (ii) in respect of the ETF Units, 95% of the market price of the ETF Units, on the effective

date of redemption and (b) the NAV per ETF Share or ETF Unit, as the case may be. “Market price” means

the weighted average trading price of the ETF Units on the Canadian marketplaces on which the ETF Units

have traded on the effective date of redemption. Because holders of ETF Shares and ETF Units will

generally be able to sell ETF Shares or ETF Units, as applicable, at the market price on the TSX (or such

other designated exchange on which the ETF Units of a Fund may be listed from time to time) through a

registered broker or dealer subject only to customary brokerage commissions, holders of ETF Shares and

ETF Units are advised to consult their brokers, dealers or investment advisors before redeeming their ETF

Shares or ETF Units, as applicable, for cash.

In order for a cash redemption to be effective on a Trading Day, a cash redemption request in the form

prescribed by the Manager from time to time must be delivered to the Manager at its registered office by

9:00 a.m. (Toronto time) on the Trading Day (or such later time on such Trading Day as the Manager may

permit). If a cash redemption request is not received by the delivery deadline noted immediately above on

a Trading Day, the cash redemption request will be effective on the next Trading Day. Payment of the

redemption price will be made by no later than the second Trading Day after the effective day of the

redemption. Cash redemption request forms may be obtained from any registered broker or dealer.

Investors that redeem ETF Shares or ETF Units, as applicable, of a Fund prior to the ex-distribution date

for the Distribution Record Date for any dividend will not be entitled to receive that dividend.

In connection with the redemption of ETF Shares or ETF Units, a Fund will generally dispose of securities

or other assets to satisfy the redemption.


Holders of Mutual Fund Shares or Mutual Fund Units may redeem their shares of a series or units of a class

for cash on any Valuation Date at a redemption price per share of the series or unit of the class, as the case

may be, equal to the NAV per share or unit of the Fund, as the case may be, on such Valuation Date.

In order for a cash redemption in respect of Mutual Fund Shares or Mutual Fund Units to be effective on a

Valuation Date, a cash redemption request in the form prescribed by the Manager from time to time must

be delivered to the Manager before 4:00 p.m. (Toronto time) or such other cut-off time as specified by the

72

Manager on the Valuation Date (or such other time on such Valuation Date as the Manager may permit). If

a cash redemption request is not received by the delivery deadline noted immediately above on a Valuation

Date, the cash redemption request will be effective on the next Valuation Date. Payment of the redemption

price will be made by no later than the second Business Day after the effective day of the redemption. Cash

redemption request forms may be obtained from any registered broker or dealer. Holders of Mutual Fund

Shares and/or Mutual Fund Units should check with their dealer as some dealers may establish an earlier

cut-off time. Holders of Series XA Shares and/or Series XF Shares must switch to a separate series of shares

of the Purpose In-Kind Exchange Fund in order to redeem their shares.

Redemption requests for Mutual Fund Shares (other than Series XA Shares and Series XF Shares) or Mutual

Fund Units of the Funds must be for an amount of at least $1,000 (unless the account balance is less than

$1,000). If your balance falls below the minimum required balance for a particular Fund or series or class,

as the case may be, or you otherwise become ineligible to hold a particular Fund or series or class, as

applicable, the Manager may redeem or switch your shares or units, as applicable. There is no minimum

for Series I Shares or Class I Units of the Funds.

Redemption by the Company of Series XA Shares and Series XF Shares

The Manager may at any time and from time to time redeem all or a portion of the Series XA Shares and/or

Series XF Shares that an investor holds in its sole discretion.

Exchange of ETF Shares/ETF Units for Baskets of Securities

On any Trading Day, holders of ETF Shares and ETF Units may exchange the Prescribed Number of

Securities (or an integral multiple thereof) for Baskets of Securities and cash.

To effect an exchange of a prescribed number of ETF Shares or ETF Units, as the case may be, of a Fund

a securityholder must submit an exchange request in the form prescribed by the Manager from time to time

to the Manager at its registered office by 9:00 a.m. (Toronto time) on a Trading Day (or such later time on

such Trading Day as the Manager may permit). The exchange redemption request forms may be obtained

from any registered broker or dealer. The exchange price will be equal to the NAV of the ETF Shares or

ETF Units, as the case may be, of the Fund being exchanged on the effective day of the exchange request,

payable by delivery of Baskets of Securities and cash. The ETF Shares or ETF Units, as the case may be,

will be redeemed in the exchange.

If an exchange request is not received by the submission deadline noted immediately above on a Trading

Day, the exchange order will be effective on the next Trading Day. Settlement of exchanges for Baskets of

Securities and cash will be made by no later than the second Trading Day after the effective day of the

exchange request. The securities to be included in the Baskets of Securities delivered on an exchange shall

be selected by the Manager in its discretion.

Holders of ETF Shares and/or ETF Units should be aware that the NAV per ETF Share or ETF Unit, as

applicable, will decline by the amount of the dividend or distribution on the ex-distribution date, which is

one Trading Day or such other day as announced by the Manager prior to the Distribution Record Date. A

securityholder that is no longer a holder of record on the applicable Distribution Record Date will not be

entitled to receive that dividend.

If Constituent Securities of a Fund are cease traded at any time by order of a securities regulatory authority

or other relevant regulator or stock exchange, the delivery of such securities to a holder of ETF Shares or

ETF Units, as the case may be, on an exchange in the Prescribed Number of Securities may be postponed

until such time as the transfer of the securities is permitted by law.

73

Requests for Exchange and Redemption

A holder of ETF Shares and/or ETF Units, as the case may be, submitting an exchange or redemption

request is deemed to represent to the relevant Fund and the Manager that: (a) it has full legal authority to

tender the ETF Shares or ETF Units, as applicable, for exchange or redemption and to receive the proceeds

of the exchange or redemption and (b) the ETF Shares or ETF Units, as applicable, have not been loaned

or pledged and are not the subject of a repurchase agreement, securities lending agreement or a similar

arrangement that would preclude the delivery of the ETF Shares or ETF Units, as applicable, to the Fund.

The Manager reserves the right to verify these representations at its discretion. Generally, the Manager will

require verification with respect to an exchange or redemption request if there are unusually high levels of

exchange or redemption activity or short interest in a Fund. If a holder of ETF Shares and/or ETF Units

upon receipt of a verification request, does not provide the Manager with satisfactory evidence of the truth

of the representations, the securityholder’s exchange or redemption request will not be considered to have

been received in proper form and will be rejected.

Suspension of Exchange and Redemption

The Manager may suspend the redemption of securities or payment of redemption proceeds of a Fund: (a)

during any period when normal trading is suspended on a stock exchange or other market on which

securities owned by the Fund are listed and traded, if these securities represent more than 50% by value or

underlying market exposure of the total assets of the Fund, without allowance for liabilities, and if these

securities are not traded on any other exchange that represents a reasonably practical alternative for the

Fund; or (b) with the prior permission of the securities regulatory authorities, for any period not exceeding

30 days during which the Manager determines that conditions exist that render impractical the sale of assets

of the Fund or that impair the ability of the Valuation Agent to determine the value of the assets of the

Fund. The suspension may apply to all requests for redemption received prior to the suspension but as to

which payment has not been made, as well as to all requests received while the suspension is in effect. All

securityholders making such requests shall be advised by the Manager of the suspension and that the

redemption will be effected at a price determined on the first Valuation Date following the termination of

the suspension. All such securityholders shall have and shall be advised that they have the right to withdraw

their requests for redemption. The suspension shall terminate in any event on the first day on which the

condition giving rise to the suspension has ceased to exist, provided that no other condition under which a

suspension is authorized then exists. To the extent not inconsistent with official rules and regulations

promulgated by any government body having jurisdiction over the Fund, any declaration of suspension

made by the Manager shall be conclusive.

Costs Associated with Exchange and Redemption

The Manager may charge to holders of ETF Shares or ETF Units, as the case may be, in its discretion, an

administrative fee of up to 2% of the exchange or redemption proceeds of a Fund to offset certain transaction

costs associated with the exchange or redemption of ETF Shares or ETF Units, as the case may be, of the

Fund.

Exchange and Redemption of ETF Shares/ETF Units through CDS Participants

The exchange and redemption rights described above must be exercised through the CDS Participant

through which the holder of ETF Shares or ETF Units, as the case may be, holds its ETF Shares or ETF

Units, as applicable. Beneficial owners of ETF Shares and/or ETF Units should ensure that they provide

exchange and/or redemption instructions to the CDS Participants through which they hold ETF Shares or

ETF Units, as applicable, sufficiently in advance of the cut-off times described above to allow such CDS

Participants to notify CDS and for CDS to notify the Manager prior to the relevant cut-off time.

74

Switching ETF Shares

Shareholders may switch (“Switch”) ETF Shares of one PFC Fund to ETF Shares of another Purpose

Corporate Fund through the facilities of CDS by contacting their financial advisor or broker. Initially, ETF

Shares may be switched in any week on Wednesday (“ETF Switch Date”) of such week (or more

frequently as may be determined by the Manager) by delivering written notice to the PFC Fund at least one

Business Day prior to the ETF Switch Date (“Switch Notice Date”) and surrendering such ETF Shares by

4:00 p.m. (Toronto time) on such date. Written notice must contain the name of the PFC Fund, the TSX

ticker symbol of the PFC Fund and the number of ETF Shares to be switched and the name of the Purpose

Corporate Fund and the TSX ticker symbol of the ETF Shares of the Purpose Corporate Fund the ETF

Shareholder wishes to switch. The Manager may, in its discretion, change the frequency with which ETF

Shares may be switched from weekly to daily at any time without notice. For greater certainty, ETF Shares

of one Purpose Corporate Fund may not be switched for Mutual Fund Shares of any Purpose Corporate

Fund and ETF Units and Mutual Fund Units of a Purpose Trust Fund may not be switched for Mutual Fund

Shares or ETF Shares of any Purpose Fund and vice versa.

Holders of ETF Shares will receive from the Company that whole number of ETF Shares of the Purpose

Corporate Fund into which they have switched equal to the Switch NAV Price per ETF Share of the PFC

Fund switched to, divided by the Switch NAV Price per Share of the Purpose Corporate Fund switched

from. As no fraction of an ETF Share will be issued upon any Switch any remaining ETF Shares of the PFC

Fund, including any fraction thereof, of the PFC Fund out of which an ETF Shareholder has switched will

be redeemed at the Switch NAV Price. The Company will, following the ETF Switch Date forward a cash

payment to CDS equal to such amount.

Pursuant to the Switch Fund Rules (as defined herein), the switch by a shareholder from one class of ETF

Shares of the Company into ETF Shares of another class of the Company will result in a disposition of such

shares at fair market value and a capital gain or a capital loss will generally be realized.

Switching Mutual Fund Shares

Shareholders may switch Series A Shares, Series F Shares, Series I Shares and Series D Shares of one PFC

Fund to Series A Shares, Series F Shares, Series I Shares or Series D Shares of another Purpose Corporate

Fund as long as they (a) maintain the relevant minimum balance in each Fund and (b) are eligible to

purchase the new series. See “Purchase of Securities – Initial Investment”. Shareholders may switch Series

XA Shares and Series XF Shares, of one Purpose Corporate Fund to Series XA Shares and Series XF Shares

(or if authorized by the Manager, to Series I Shares) of another Purpose Corporate Fund. For greater

certainty, (a) Mutual Fund Shares of one Purpose Corporate Fund may not be switched for ETF Shares of

any Purpose Corporate Fund or ETF Units and vice versa; (b) Series XA Shares and Series XF Shares may

not be switched for Series A Shares, Series F Shares, Series I Shares (unless authorized by the Manager) or

Series D Shares and vice versa and (c) Mutual Fund Shares may not be switched for Mutual Fund Units of

a Purpose Trust Fund or ETF Shares or ETF Units of any Purpose Fund and vice versa. Initially Mutual

Fund Shares may be switched on any Business Day. Holders of Mutual Fund Shares or Mutual Fund Units,

as the case may be, who wish to switch their shares for Mutual Fund Shares of another PFC Fund or Mutual

Fund Units for another class of units of a Purpose Trust Fund, as the case may be, should speak with their

broker, dealer or investment advisor for further details.

The Manager may, in its discretion, reject any switch request.

The Manager may, in its discretion, change the frequency with which Mutual Fund Shares may be switched

at any time without notice.

75

Recent amendments to the Tax Act eliminate the ability of shareholders of a mutual fund corporation to

switch between different share classes of such a corporation on a tax-deferred basis (the “Switch Fund

Rules”). Pursuant to the Switch Fund Rules, a Switch of Series A Shares, Series F Shares, Series I Shares,

Series D Shares, Series XA Shares or Series XF Shares from one Purpose Corporate Fund to Series A

Shares, Series F Shares, Series D Shares, Series I Shares, Series XA Shares or Series XF Shares, as

applicable, of a different Purpose Corporate Fund will constitute a disposition of such shares for purposes

of the Tax Act. The rules, however, should not apply to reclassifications of shares where a shareholder

exchanges a share of one class for another share of the same class and both shares derive their value from

the same property or group of properties. This exception is intended to permit shareholders to continue to

switch between Mutual Fund Shares of different series of the same fund on a tax-deferred basis. See

“Income Tax Considerations – PFC Funds”.

No Switching of Units

Securityholders may not switch ETF Units or Mutual Fund Units of a Purpose Trust Fund for ETF Shares

or Mutual Fund Shares of any Purpose Corporate Fund and a holder of ETF Shares or Mutual Fund Shares

of a Purpose Corporate Fund may not switch its ETF Shares or Mutual Fund Shares for ETF Units or Mutual

Fund Units of a Purpose Trust Fund. Holders of Mutual Fund Units of a Purpose Trust Fund may convert

units of any class into units of any other class of the Fund.

Costs Associated with Switches

Shareholders may have to pay their financial advisor, investment advisor or broker a transfer fee based on

the value of the Mutual Fund Shares that are switched. The PFC Funds will not charge a transfer or switch

fee to a shareholder to transact a Switch unless the shareholder has held the shares of the PFC Fund for 30

days or less in which case the Manager may charge an administrative fee of up to 2% of the Switch proceeds

to offset certain transaction costs associated with the Switch.

Suspension and Restrictions on Switches

ETF Shares

The Manager has the right to decline any Switch request. Switches will only be transacted if the following

conditions are met: (a) the minimum size of any Switch is equal to or greater than 2,500 ETF Shares of a

Purpose Corporate Fund; (b) the ETF Switch Date does not occur between the ex-date and the record date

of a dividend payable by the Purpose Corporate Fund on its ETF Shares; (c) the Switch will not result in

the Purpose Corporate Fund not meeting the TSX minimum listing requirements; and (d) in the event the

ETF Shareholder has enrolled in the Dividend Reinvestment Plan of the Purpose Corporate Fund such ETF

Shareholder remains enrolled in the Dividend Reinvestment Plan for the ETF Shares into which such ETF

Shareholder is switching.

Mutual Fund Shares

The Manager has the right to decline any Switch request.

Short-Term Trading


At the present time, the Manager is of the view that it is not necessary to impose any short-term trading

restrictions on the Funds as the ETF Shares and ETF Units, are generally traded by investors on an exchange

76

in the secondary market in the same way as other listed securities. In the few situations where ETF Shares

or ETF Units are not purchased in the secondary market, purchases usually involve a Designated Broker or

a Dealer upon whom the Manager may impose a redemption fee, which is intended to compensate the

applicable Fund for any costs and expenses incurred in relation to the trade.


The Manager is of the view that frequent trading or switching of Mutual Fund Shares and Mutual Fund

Units in order to time the market or otherwise can negatively impact the value of the Funds to the detriment

of other securityholders. Excessive short-term trading can also reduce a Fund’s return because the Fund

may be forced to hold additional cash to pay redemption proceeds or, alternatively, to sell portfolio

holdings, thereby incurring additional trading costs.

Depending on the particular circumstances, Purpose will employ a combination of preventative and

detective measures to discourage and identify excessive short-term trading of Mutual Fund Shares and

Mutual Fund Units, including:

(a) imposition of short-term trading fees; and

(b) monitoring of trading activity and refusal of trades.

See “Fee and Expenses – Fees and Expenses Payable Directly by Securityholders – Short-Term Trading

Fees”.

PRICE RANGE AND TRADING VOLUME OF ETF SHARES/ETF UNITS

The following table sets out the consolidated market price range and monthly trading volume of the ETF

Shares or ETF Units, as the case may be, of the Funds on the TSX and other designated exchanges (as

described below) on which the ETF Shares and ETF Units of the Funds traded for the 12-month period

before the date of the prospectus. This information is not yet available for the New Purpose Funds because

no ETF Units of the New Purpose Funds have been issued.

Purpose Diversified Real Asset Fund – ETF shares1

Price

High Low Volume

2017

July $18.49 $17.21 15,239

August $17.64 $17.39 1,501

September $17.87 $17.50 1,477

October $18.36 $17.87 7,484

November $18.63 $18.29 3,652

December $18.80 $18.18 2,374

2018

January $19.02 $18.80 37,855

February $19.02 $17.79 26,304

March $19.02 $17.79 6,201

April $18.87 $17.79 8,106

May $19.29 $18.04 4,041

June $19.59 $19.29 5,171

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Note:

(1) Includes the TSX, NASDAQ CX2, NASDAQ CXC Limited, TriAct Canada Marketplace LP, Omega ATS, Aequitas NEO Exchange

Inc., Omega Lynx and Pure Trading.

Purpose Enhanced US Equity Fund – ETF shares1

Price

High Low Volume

2017

July $24.47 $23.90 14,447

August $24.47 $23.54 1,590

September $25.30 $23.54 1,079

October $25.98 $25.29 1,952

November $26.88 $25.39 2,234

December $27.85 $26.88 6,685

2018

January $29.68 $27.83 31,692

February $29.68 $26.52 12,616

March $29.68 $25.75 2,219

April $28.66 $25.75 3,450

May $27.21 $25.75 32,614

June $27.34 $26.25 17,350 Note:

(1) Includes the TSX, NASDAQ CX2, NASDAQ CXC Limited, TriAct Canada Marketplace LP, Omega ATS, Aequitas NEO Exchange Inc., Omega Lynx and Alpha Exchange Inc.

Purpose Enhanced US Equity Fund– ETF Non-Currency Hedged Shares1

Price

High Low Volume

2017

July $29.37 $28.35 17,040

August $28.35 $26.62 1,500

September $26.62 $25.79 800

October $28.89 $25.79 1,126

November $30.34 $28.67 1,500

December $30.34 $30.34 -

2018

January $30.34 $30.34 21,996

February $30.56 $29.20 3,500

March $30.56 $29.20 1,600

April $30.56 $29.13 2,000

May $29.57 $29.13 -

June $31.24 $31.24 4,900 Note:

(1) Includes the TSX, NASDAQ CX2, NASDAQ CXC Limited, TriAct Canada Marketplace LP, Omega ATS, Aequitas NEO Exchange Inc., Omega Lynx and Alpha Exchange Inc.

78

Purpose Multi-Strategy Market Neutral Fund – ETF Units1

Price

High Low Volume

2017

July $22.16 $21.35 169,256

August $21.70 $21.30 175,666

September $22.01 $21.47 38,650

October $22.49 $21.93 29,460

November $22.91 $22.29 21,904

December $23.46 $22.70 30,190

2018

January $23.46 $22.70 528,795

February $23.46 $22.19 107,665

March $23.46 $22.19 42,054

April $23.35 $22.19 58,628

May $23.47 $22.58 103,049

June $23.51 $23.10 65,022 Note:

(1) Includes the TSX, NASDAQ CX2, NASDAQ CXC Limited, TriAct Canada Marketplace LP, Omega ATS, Aequitas NEO Exchange

Inc., Omega Lynx, Pure Trading and Alpha Exchange Inc.

INCOME TAX CONSIDERATIONS

In the opinion of Osler, Hoskin & Harcourt LLP, the following is a summary of the principal Canadian

federal income tax considerations under the Tax Act for the Funds and for a prospective investor in the

Funds that, for the purposes of the Tax Act, is an individual, other than a trust, is resident in Canada, holds

securities as capital property, has not entered into a “derivative forward agreement” as defined in the Tax

Act in respect of such securities and is not affiliated and deals at arm’s length with the Funds. This summary

is based upon the current provisions of the Tax Act and regulations thereunder, all specific proposals to

amend the Tax Act and such regulations that have been publicly announced by the Minister of Finance

(Canada) prior to the date hereof (“Tax Proposals”), and counsel’s understanding of the current published

administrative policies and assessing practices of the Canada Revenue Agency. This summary does not

take into account or anticipate any other changes in law whether by legislative, administrative or judicial

action and it does not take into account provincial, territorial or foreign income tax legislation or

considerations, which may differ from the considerations described below.

This summary is of a general nature only and is not exhaustive of all possible income tax

considerations. Prospective investors should therefore consult their own tax advisors about their

individual circumstances.

This summary is also based on the assumptions that: (a) none of the issuers of securities held by the Funds

will be a foreign affiliate of any Fund or any holder of securities; (b) the Funds will not invest in any

security, directly or indirectly, that is an “offshore investment fund property” as that term is defined in

section 94.1 of the Tax Act; (c) none of the securities held by the Funds will be a “tax shelter investment”

within the meaning of section 143.2 of the Tax Act; (d) none of the securities held by the Funds will be an

interest in a non-resident trust other than an “exempt foreign trust” as defined in the Tax Act; and (e) the

Funds will not enter into any arrangement where the result is a dividend rental arrangement for the purposes

of the Tax Act.

79

PFC Funds

Status of the Company

The Company intends at all relevant times to qualify as a “mutual fund corporation” as defined in the Tax

Act. To qualify as a mutual fund corporation, (a) the Company must be a “Canadian corporation” that is a

“public corporation” for purposes of the Tax Act; (b) the only undertaking of the Company must be the

investing of its funds in property (other than real property or interests in real property or immovables or

real rights in immovables); and (c) at least 95% of the fair market value of all of the issued shares of the

capital stock of the Company must be redeemable at the demand of the holders of those shares. The

Company has informed counsel that it filed the necessary election under the Tax Act so that it was deemed

to be a “public corporation” effective from the beginning of its first taxation year and, therefore, qualified

as a mutual fund corporation throughout its first taxation year.

Taxation of the PFC Funds

Each PFC Fund is a separate Corporate Class of the Company. Although the Company is comprised of a

number of Corporate Classes, it must (like any other mutual fund corporation with a multi-class structure)

compute its income and net capital gains for tax purposes as a single entity. All of the Company’s revenues,

deductible expenses, capital gains and capital losses in connection with all of its investment portfolios, and

other items relevant to its tax position (including the tax attributes of all of its assets), will be taken into

account in determining the income or loss of the Company and applicable taxes payable by the Company

as a whole. For example, expenses, tax deductions and losses arising from the Company’s investments and

activities in respect of one Corporate Class may be deducted or offset against income or gains arising from

the Company’s investments and activities in respect of other Corporate Classes. As a result of the Company

being required to calculate its income as a single entity, the overall result for a holder of shares of a PFC

Fund will differ from what would be the case if the shareholder had invested in a mutual fund trust, or a

single-class mutual fund corporation, that made the same investments as the Fund.

The Company has established a policy to determine how it will allocate income and capital gains in a tax-

efficient manner among the PFC Funds in a way that it believes is fair, consistent and reasonable for

shareholders. The amount of dividends and capital gains dividends paid to shareholders is based on this tax

allocation policy, which has been approved by the Company’s board of directors.

Capital gains may be realized by the Company in a variety of circumstances, including on the disposition

of portfolio assets of the Company as a result of shareholders of a PFC Fund switching their ETF Shares,

Series A Shares, Series F Shares, Series I Shares, Series D shares, Series XA shares or Series XF shares, as

the case may be, for ETF Shares, Series A Shares, Series F Shares, Series I Shares, Series D Shares, Series

XA shares or Series XF shares, as applicable, of another PFC Fund.

Pursuant to the Switch Fund Rules, the switch by a shareholder from one class of Mutual Fund Shares of

the Company into Mutual Fund Shares of another class of the Company would result in a disposition at fair

market value and a capital gain or a capital loss would generally be realized. The rules should not apply to

reclassifications of shares where a shareholder exchanges a share of one class of Mutual Fund Shares for

another share of the same class and both shares derive their value from the same property or group of

properties. This exception is intended to permit shareholders to continue to switch between Mutual Fund

Shares of different series of the same Fund on a tax-deferred basis.

The taxable portion of capital gains (net of the allowable portion of capital losses) realized by the Company

will be subject to tax at corporate rates applicable to mutual fund corporations, but taxes paid thereon by

the Company are generally refundable on a formula basis when shares of the Company are redeemed or

80

when the Company pays capital gains dividends. Accordingly, if sufficient amounts are paid by the

Company on the redemption of its shares or as capital gains dividends, generally the Company will not pay

tax on its capital gains.

Premiums received on covered call options and cash-covered put options written by the Company that are

not exercised prior to the end of the year will constitute capital gains of the Company in the year received,

unless such premiums are received by the Company as income from a business of buying and selling

securities or the Company has engaged in a transaction or transactions considered to be an adventure in the

nature of trade. The Manager has informed counsel that each Fund’s portfolio will be acquired with the

objective of earning dividends thereon over the life of the Fund, and that the Fund will write covered call

options with the objective of increasing the yield on the portfolio beyond the dividends received on the

portfolio, and that the Fund will write cash-covered put options to increase returns and to reduce the net

cost of purchasing securities upon the exercise of put options. Thus, having regard to the foregoing and in

accordance with the Canada Revenue Agency’s published administrative practice, the Manager intends that

option transactions undertaken by a Fund in respect of securities comprising the Fund’s portfolio will be

treated and reported by the Company as arising on capital account.

Premiums received by the Company on covered call (or cash-covered put) options that are subsequently

exercised will be added in computing the proceeds of disposition (or deducted in computing the adjusted

cost base) to the Company of the securities disposed of (or acquired) by the Company upon the exercise of

such call (or put) options. In addition, where the premium was in respect of an option granted in a previous

year so that it constituted a capital gain of the Company in the previous year, such capital gain may be

reversed.

In general, the Company will not pay tax on taxable dividends received from taxable Canadian corporations.

The Company will be subject to the refundable tax under Part IV of the Tax Act on taxable dividends

received by it from taxable Canadian corporations in an amount equal to 38⅓% of such dividends.

With respect to other income received by the Company, such as ordinary income, interest and foreign

dividends, the Company will generally be subject to tax at corporate rates applicable to mutual fund

corporations subject to permitted deductions for expenses of the Company and applicable credits for any

foreign taxes paid. Where a PFC Fund invests in derivatives as a substitute for direct investment, the

Company will generally treat gains and losses realized on such derivatives as being on income account

rather than as capital gains and capital losses. Where a derivative is sufficiently linked to a capital asset or

transaction of the Company to be treated on capital account, it will nonetheless be treated on income account

where it qualifies as a “derivative forward agreement” under the Tax Act.

The Company may be subject to the suspended loss rules contained in the Tax Act. A loss realized on a

disposition of property may be considered to be a suspended loss when the Company acquires a property

(a “substituted property”) that is the same or identical to the property disposed of, within 30 days before

and 30 days after the disposition and the Company owns the substituted property 30 days after the original

disposition. If a loss is suspended, the Company cannot deduct the loss from the Company’s gains until the

substituted property is sold and is not reacquired within 30 days before and after the sale.

In determining the income of the Company, gains or losses realized upon dispositions of securities in which

the Company has invested will constitute capital gains or capital losses of the Company in the year realized

unless the Company is considered to be trading or dealing in securities or otherwise carrying on a business

of buying and selling securities or the Company has acquired the securities in a transaction or transactions

considered to be an adventure in the nature of trade. The Company has advised counsel that if the Company

holds “Canadian securities” (as defined in the Tax Act) it will elect in accordance with the Tax Act to have

81

each such security treated as capital property. Such election will ensure that gains or losses realized by the

Company on the disposition of Canadian securities are taxed as capital gains or capital losses.

The Company is required to compute its income and gains for tax purposes in Canadian dollars and may

therefore realize foreign exchange gains or losses with respect to its foreign investments that will be taken

into account in computing its income for tax purposes.

The Company may pay foreign withholding or other taxes in connection with investments in foreign

securities.

Taxation of Shareholders

A holder of shares of a PFC Fund will be required to include in his or her income the Canadian dollar

amount of any dividends paid on such shares, other than capital gains dividends, whether received in cash

or reinvested in additional shares. The dividend gross-up and tax credit treatment normally applicable to

taxable dividends (including eligible dividends) paid by a taxable Canadian corporation will apply to such

dividends.

If the Company pays a return of capital, such amount will generally not be taxable but will reduce the

adjusted cost base of the holder’s shares of the PFC Fund in respect of which the return of capital was paid.

However, where such returns of capital are reinvested in new shares, the holder’s overall adjusted cost base

of such shares will not be reduced. In the circumstance that reductions to the adjusted cost base of a holder’s

shares would result in such adjusted cost base becoming a negative amount, that amount will be treated as

a capital gain realized by the holder of the shares and the adjusted cost base will then be zero.

Capital gains dividends will be paid to shareholders, at the discretion of the Company’ board of directors

with respect to the timing, the amount and the Corporate Classes on which the dividends will be paid, out

of the capital gains realized by the Company, including capital gains realized on the disposition of portfolio

assets occurring as a result of shareholders switching their shares into shares of another PFC Fund. The

amount of a capital gains dividend paid to holders of shares will be treated as a capital gain in the hands of

the holder and will be subject to the general rules relating to the taxation of capital gains which are described

below.

A holder of shares who receives a management fee rebate will include the amount of such rebate in income

or in the alternative may reduce the adjusted cost base of the holder’s shares by the amount of the rebate.

Pursuant to the Switch Fund Rules, the switch by a shareholder from one class of ETF shares or Mutual

Fund Shares of the Company into ETF Shares or Mutual Fund Shares, as applicable, of another class of the

Company will result in a disposition at fair market value and a capital gain or a capital loss would generally

be realized. The rules should not apply to reclassifications of shares where a shareholder exchanges a share

of one class of Mutual Fund Shares for another share of the same class and both shares derive their value

from the same property or group of properties. This exception is intended to permit shareholders to continue

to switch between Mutual Fund Shares of different series of the same Fund on a tax-deferred basis.

The cost of the Mutual Fund Shares acquired on a Switch will be required to be averaged with the adjusted

cost base of any other Mutual Fund Shares of the same series of the PFC Fund owned by the holder in

determining the holder’s adjusted cost base per Mutual Fund Share.

Upon the actual or deemed disposition of a share, including the redemption of a share for cash proceeds on

a Switch or otherwise, a capital gain (or a capital loss) will generally be realized to the extent that the

proceeds of disposition of the shares exceed (or are exceeded by) the aggregate of the adjusted cost base to

82

the holder of such shares and the costs of disposition. One-half of a capital gain realized on the disposition

will be included in income as a taxable capital gain. One-half of any capital loss realized may be deducted

against any taxable capital gains, subject to and in accordance with the detailed rules of the Tax Act. Holders

of shares should consult their own advisors with respect to provisions of the Tax Act which reduce any

such losses by the amount of certain dividends received on shares.

Where ETF Shares of a PFC Fund are exchanged by a redeeming holder of ETF Shares for Baskets of

Securities, or where securities are received by a holder of shares of the PFC Fund on a distribution in specie

on the termination of the PFC Fund, the proceeds of disposition to the holder of the shares will be equal to

the fair market value of the securities so received, plus the amount of any cash received on the exchange.

The cost for tax purposes of securities acquired by a redeeming ETF Shareholder on the exchange or

redemption of ETF Shares of the PFC Fund will generally be the fair market value of such securities at that

time.

Tax Election under Section 85 of the Tax Act in Respect of Series XA Shares and Series XF Shares

An investor, that is not exempt from tax under the Tax Act, or a partnership, no member of which is exempt

from tax under the Tax Act, that exchanges shares of Canadian or U.S. public companies in consideration

for Series XA Shares or Series XF Shares may, provided such shares are “eligible property” as defined in

subsection 85(1.1) of the Tax Act, make a joint election (under subsection 85(1) or 85(2) of the Tax Act

(and, in either case, the corresponding provision of any applicable provincial income tax legislation)) with

the Company pursuant to section 85 of the Tax Act and thereby obtain a full or partial tax-deferred

“rollover” for Canadian income tax in respect of such exchange.

Taxation of Registered Plans

In general, the amount of a distribution paid by a Fund to a Registered Plan on a disposition of Mutual Fund

Shares will not be taxable under the Tax Act. However, amounts withdrawn from a Registered Plan may

be subject to tax (other than a return of contributions from an RESP or certain withdrawals from an RDSP,

and withdrawals from a TFSA).

Tax Implications of the PFC Funds’ Dividend Policy

When an investor purchases shares of a PFC Fund, a portion of the price paid may reflect income or capital

gains accrued or realized before such person acquired such shares. This may particularly be the case if such

shares are purchased near year-end before a special year-end distribution is paid.

Alternative Minimum Tax

Individuals who receive dividends from the Company or who realize net capital gains from the disposition

of shares of a PFC Fund may be subject to alternative minimum tax under the Tax Act.

Purpose Trust Funds

Status of the Purpose Trust Funds

This summary is based on the assumption that each Purpose Trust Fund will comply at all material times

with the conditions prescribed in the Tax Act and otherwise so as to qualify as a “mutual fund trust” as

defined in the Tax Act. Counsel is advised that each Purpose Trust Fund is expected to qualify, as a “mutual

fund trust” under the Tax Act at all material times. If a Purpose Trust Fund were to not qualify as a “mutual

83

fund trust” for the purposes of the Tax Act for any period of time, the tax considerations could be materially

different from those described below.

Taxation of the Purpose Trust Funds

Each Purpose Trust Fund will include in computing its income taxable distributions received on securities

held by it, including any special dividends, the taxable portion of capital gains realized by the Fund on the

disposition of securities held by it, and income earned by any securities lending activity. Each Purpose

Trust Fund will include in computing its income any interest accruing to it on bonds held by the Fund.

The Declaration of Trust governing the Purpose Trust Funds requires that each Fund distribute its net

income and net realized capital gains, if any, for each taxation year of the Fund to its unitholders to such an

extent that the Fund will not be liable in any taxation year for ordinary income tax (after taking into account

any applicable losses of the Fund and any capital gains refunds to which the Fund is entitled). If in a taxation

year the income for tax purposes of a Purpose Trust Fund exceeds the cash available for distribution by the

Fund, such as in the case of the receipt by the Fund of special dividends, the Fund will distribute its income

through a payment of reinvested distributions.

If a Purpose Trust Fund invests in another fund (an “Underlying Fund”) that is a Canadian resident trust

other than a SIFT trust, the Underlying Fund may designate a portion of amounts that it distributes to the

Fund as may reasonably be considered to consist of: (a) taxable dividends (including eligible dividends)

received by the Underlying Fund on shares of taxable Canadian corporations; and (b) net taxable capital

gains realized by the Underlying Fund. Any such designated amounts will be deemed for tax purposes to

be received or realized by the Purpose Trust Fund as a taxable dividend or taxable capital gain, respectively.

An Underlying Fund that pays foreign withholding tax may make designations such that the Purpose Trust

Fund may be treated as having paid its share of such foreign tax.

The Purpose Trust Funds may be subject to the suspended loss rules contained in the Tax Act. A loss

realized on a disposition of property may be considered to be a suspended loss when a Fund acquires a

property (a “substituted property”) that is the same or identical to the property disposed of, within 30 days

before and 30 days after the disposition and the Fund owns the substituted property 30 days after the original

disposition. If a loss is suspended, the Purpose Trust Fund cannot deduct the loss from the Fund’s gains

until the substituted property is sold and is not reacquired within 30 days before and after the sale.

In determining the income of a Purpose Trust Fund, gains or losses realized upon dispositions of securities

in which the Fund has invested will constitute capital gains or capital losses of the Fund in the year realized

unless the Fund is considered to be trading or dealing in securities or otherwise carrying on a business of

buying and selling securities or the Fund has acquired the securities in a transaction or transactions

considered to be an adventure in the nature of trade. The Manager has advised counsel that if a Purpose

Trust Fund holds “Canadian securities” (as defined in the Tax Act) it will elect in accordance with the Tax

Act to have each such security treated as capital property. Such election will ensure that gains or losses

realized by the Purpose Trust Fund on the disposition of Canadian securities are taxed as capital gains or

capital losses.

Each Purpose Trust Fund will be entitled for each taxation year throughout which it is a mutual fund trust

to reduce (or receive a refund in respect of) its liability, if any, for tax on its net realized capital gains by an

amount determined under the Tax Act based on the redemptions of its units during the year (“capital gains

refund”). The capital gains refund in a particular taxation year may not completely offset the tax liability

of the Purpose Trust Fund for such taxation year which may arise upon the sale of its investments in

connection with redemptions of units.

84

The Manager has advised counsel that, generally, a Purpose Trust Fund will include gains and deduct losses

on income account, rather than as capital gains and capital losses, in connection with investments made

through derivative transactions, except where such derivatives are entered into in order to hedge, and are

sufficiently linked with, securities that are held on capital account by the Fund, and will recognize such

gains or losses for tax purposes at the time they are realized by the Fund. Where a Purpose Trust Fund uses

derivatives to hedge foreign currency exposure with respect to securities held on capital account, gains or

losses realized on such derivatives will generally be treated as capital gains or capital losses where such

derivatives are sufficiently linked to the securities. A derivative that is on capital account may nonetheless

be treated on income account if it is a “derivative forward agreement” within the meaning of the Tax Act.

Each Purpose Trust Fund is required to compute its income and gains for tax purposes in Canadian dollars.

Therefore, the amount of income, cost, proceeds of disposition and other amounts in respect of investments

that are not Canadian dollar denominated will be affected by fluctuations in the exchange rate of the

Canadian dollar against the relevant foreign currency.

The Purpose Trust Funds may pay foreign withholding or other taxes in connection with investments in

foreign securities.

Taxation of Unitholders

A holder of units of a Purpose Trust Fund will be required to include in his or her income the Canadian

dollar amount of net income and net taxable capital gains of the Fund, if any, paid or payable to the holder

in the year and deducted by the Fund in computing its income, whether or not such amounts are reinvested

in additional units (including ETF Plan Securities acquired under the Reinvestment Plan), including in the

case of a holder who receives management fee distributions to the extent they are paid out of net income

and net taxable capital gains of the Fund.

The non-taxable portion of any net realized capital gains of a Purpose Trust Fund that is paid or payable to

a unitholder in a taxation year will not be included in computing the unitholder’s income for the year and

will not reduce the adjusted cost base of the unitholder’s units of the Fund. Any other non-taxable

distribution, such as a return of capital, will not be included in computing the unitholder’s income for the

year but will reduce the unitholder’s adjusted cost base (unless the Purpose Trust Fund elects to treat such

amount as a distribution of additional income). To the extent that a unitholder’s adjusted cost base would

otherwise be a negative amount, the negative amount will be deemed to be a capital gain realized by the

unitholder and the unitholder’s adjusted cost base will be nil immediately thereafter.

Each Purpose Trust Fund will designate, to the extent permitted by the Tax Act, the portion of the net

income distributed to unitholders as may reasonably be considered to consist of net taxable capital gains, if

any, realized or considered to be realized by the Fund. Any such designated amount will be deemed for tax

purposes to be received or realized by unitholders in the year as a taxable dividend and as a taxable capital

gain, respectively. Capital gains so designated will be subject to the general rules relating to the taxation of

capital gains described below. In addition, a Purpose Trust Fund may make designations in respect of

income from foreign sources, if any, so that unitholders may be able to claim a foreign tax credit in

accordance with the provisions of and subject to the general limitations under the Tax Act for a portion of

foreign tax, if any, paid or considered to be paid by the Fund. Any loss realized by a Purpose Trust Fund

for purposes of the Tax Act cannot be allocated to, and cannot be treated as a loss of, the unitholders of the

Fund.

Holders of units of a Purpose Trust Fund will be informed each year of the composition of the amounts

distributed to them, including amounts in respect of both cash and reinvested distributions. This information

will indicate whether distributions are to be treated as ordinary income, taxable capital gains, non-taxable

85

amounts or foreign source income, and as to foreign tax deemed paid by the unitholder as those items are

applicable.

Upon the actual or deemed disposition of a unit of a Purpose Trust Fund, including the exchange or

redemption of a unit, and including upon the termination of the Fund, a capital gain (or a capital loss) will

generally be realized by the unitholder to the extent that the proceeds of disposition of the unit exceed (or

are less than) the aggregate of the adjusted cost base to the unitholder of the unit and any reasonable costs

of disposition. In general, the adjusted cost base of all units of a Purpose Trust Fund held by the unitholder

is the total amount paid for the units (including brokerage commissions paid and the amount of reinvested

dividends), regardless of when the investor bought them, less any non-taxable distributions (other than the

non-taxable portion of capital gains) such as a return of capital and less the adjusted cost base of any units

of the Fund previously redeemed/exchanged by the unitholder. For the purpose of determining the adjusted

cost base of units to a unitholder, when units of a Purpose Trust Fund are acquired, the cost of the newly

acquired units will be averaged with the adjusted cost base of all units of the Fund owned by the unitholder

as capital property immediately before that time. The cost of units acquired on the reinvestment of

dividends, including under the Reinvestment Plan, will be the amount so reinvested.

Where units of a Purpose Trust Fund are exchanged by the redeeming unitholder for Baskets of Securities,

or where securities are received by a unitholder on a distribution in specie on the termination of the Fund,

the proceeds of disposition to the unitholder of the units will be equal to the fair market value of the

securities so received, plus the amount of any cash received on the exchange, and less any capital gain or

income realized by the Fund as a result of the transfer of those securities that has been designated by the

Fund to the unitholder. Where a capital gain realized by a Purpose Trust Fund as a result of the transfer of

securities on the redemption of units has been designated by the Fund to a redeeming unitholder, the

securityholder will be required to include in income the taxable portion of the capital gain so designated.

The cost for tax purposes of securities acquired by a redeeming unitholder on the exchange or redemption

of units will generally be the fair market value of such securities at that time.

Where securities of Constituent Issuers are accepted as payment for ETF Units acquired by a unitholder,

such unitholder will generally realize a capital gain (or capital loss) in the taxation year of the unitholder in

which the disposition of such securities takes place to the extent that the proceeds of disposition for such

securities, net of any reasonable costs of disposition, exceed (or are less than) the adjusted cost base of such

securities to the unitholder. For this purpose, the proceeds of disposition to the unitholder will equal the

aggregate of the fair market value of the ETF Units received and the amount of any cash received in lieu of

fractional ETF Units. The cost to a unitholder of ETF Units so acquired will be equal to the fair market

value of the securities of the Constituent Issuers disposed of in exchange for such ETF Units at the time of

disposition less any cash received in lieu of fractional ETF Units, which sum would generally be equal to

or would approximate the fair market value of the ETF Units received as consideration for the securities of

Constituent Issuers. In computing the adjusted cost base of an ETF Unit so acquired by a unitholder, the

cost of such ETF Unit must be averaged with the adjusted cost base of any other ETF Units then held by

that unitholder as capital property. Where the securities so disposed of by a unitholder are denominated in

a currency other than Canadian dollars, any capital gain or capital loss realized by the unitholder will be

determined by converting the unitholder’s cost and proceeds of disposition into Canadian dollars using the

applicable rate of exchange on the date of acquisition and disposition, respectively.

Taxation of Capital Gains and Capital Losses

One-half of any capital gain realized by a unitholder and the amount of any net taxable capital gains realized

or considered to be realized by a Purpose Trust Fund and designated by the Fund in respect of a unitholder

will be included in the unitholder’s income as a taxable capital gain. One-half of a capital loss realized by

86

a unitholder will be an allowable capital loss that may be deducted from taxable capital gains subject to and

in accordance with detailed rules in the Tax Act.

Taxation of Registered Plans

In general, a Registered Plan will not be taxable on the amount of a distribution paid or payable to a

Registered Plan from a Purpose Trust Fund, nor on gains realized by a Registered Plan on a disposition of

a unit. As is the case for all investments held in Registered Plans, amounts withdrawn from a Registered

Plan (other than from a TFSA or a return of contributions from an RESP or RDSP) will generally be subject

to tax.

Tax Implications of the Purpose Trust Funds’ Distribution Policy

When an investor purchases units of a Purpose Trust Fund, a portion of the price paid may reflect income

or capital gains accrued or realized before such person acquired such units. When these amounts are payable

to such unitholder as distributions, they must be included in the unitholder’s income for tax purposes subject

to the provisions of the Tax Act, even though the Fund earned or accrued these amounts before the

unitholder owned the units and the amounts may have been reflected in the price paid for the units. This

may particularly be the case if units are purchased near year-end before the final year-end distributions have

been made.

Alternative Minimum Tax

Investors who receive distributions of taxable dividends or capital gains from a Purpose Trust Fund who

realize net capital gains from the disposition of units of a Purpose Trust Fund may be subject to alternative

minimum tax under the Tax Act.

International Information Reporting

Pursuant to Part XVIII of the Tax Act (“Part XVIII”), which implemented the Intergovernmental

Agreement for the Enhanced Exchange of Tax Information under the Canada-U.S. Tax Convention,

securityholders, or a controlling person of a securityholder, will be required to provide their dealer with

information related to their citizenship or residence for tax purposes and, if applicable, a U.S. federal tax

identification number. If a securityholder does not provide the information or is identified as a U.S. citizen

or U.S. resident, details of the securityholder’s investment in the Fund will generally be reported to the

Canada Revenue Agency, unless the investment is held within a Registered Plan. The Canada Revenue

Agency is expected to provide the information to the U.S. Internal Revenue Service pursuant to the

provisions of the Canada-U.S. Tax Convention.

In addition, reporting obligations in the Tax Act have been enacted to implement the Organization for

Economic Co-operation and Development Common Reporting Standard (the “CRS Rules”). Pursuant to

the CRS Rules, in order to meet the objectives of the Organisation for Economic Co-operation and

Development Common Reporting Standard (the “CRS”), Canadian financial institutions required to have

procedures in place to identify accounts held by residents of foreign countries (other than the United States)

or by certain entities any of whose controlling persons are resident in a foreign country (other than the

United States). The CRS Rules provide that beginning in 2018, Canadian financial institutions must report

required information to the Canada Revenue Agency annually. Such information would be available to be

exchanged on a reciprocal, bilateral basis with the jurisdictions in which the account holders or such

controlling persons are resident. Under the CRS Rules, securityholders are required to provide such

information regarding their investment in a Fund to their dealer for the purpose of such an information

exchange, unless the investment is held within a Registered Plan.

87

ELIGIBILITY FOR INVESTMENT

It is intended that the securities of the Funds will at all relevant times be qualified investments for trusts

governed by Registered Plans.

Notwithstanding the foregoing, the holder of a TFSA, or the annuitant under an RRSP or RRIF will be

subject to a penalty tax in respect of securities held by such TFSA, RRSP, RRIF, RESP or RDSP, as the

case may be, if such securities of the Fund are a “prohibited investment” for such plan trusts for the purposes

of the Tax Act. The securities of a Fund will not be a “prohibited investment” for trusts governed by a

TFSA, RRSP, RRIF, RESP or RDSP unless the holder of the TFSA, RDSP, subscriber of the RESP or the

annuitant under the RRSP or RRIF, as applicable, does not deal at arm’s length with the Fund for purposes

of the Tax Act, or has a “significant interest” as defined in the Tax Act in the Fund. Holders of TFSAs,

RDSPs, subscribers of RESPs and annuitants of RRSPs and RRIFs, should consult with their tax advisors

as to whether shares or units, as the case may be, would be a prohibited investment for such accounts or

plans in their particular circumstances.

Securities received on the redemption of securities of the Funds may not be qualified investments for trusts

governed by Registered Plans.

ORGANIZATION AND MANAGEMENT DETAILS OF THE FUNDS

Officers and Directors of the Company

As each PFC Fund is a class of shares in the capital of the Company, governance and management decisions

are ultimately made by the board of directors of the Company. The Company’s board of directors consists

of a minimum of 3 and a maximum of 10 directors. The board of directors is currently composed of 3

directors, 2 of whom are unrelated directors within the meaning of the rules of the TSX and “independent”

within the meaning of applicable securities legislation. Directors are appointed to serve on the board of

directors until such time as they retire or are removed and successors are appointed. The name, municipality

of residence, position with the Company and principal occupation of each of the directors and officers of

the Company are as follows:

Name and

Municipality of

Residence Position with the Company

Principal Occupation for the Past 5

Years

SOM SEIF

Toronto, Ontario

President, Chief Executive

Officer, Chairman of the Board

of Directors and Director

President, Chief Executive Officer and

Chairman of the Board of Directors of

Purpose Investments Inc.

SCOTT BARTHOLOMEW

Milton, Ontario

Chief Financial Officer Chief Operating Officer of Purpose

Investments Inc.

DOUGLAS G. HALL

Halifax, Nova Scotia

Director, Member of the

Independent Review Committee

Corporate Director

RANDALL C. BARNES

Las Vegas, Nevada

Director, Member of the


Corporate Director

A description of the experience and background relevant to the business of the Funds for each of the above

directors and officers of the Company is set out below.

88

Douglas G. Hall

Douglas G. Hall was a Managing Director at RBC Capital Markets covering public and private capital

raising, mergers and acquisitions support and strategic advisory assignments for diversified industry groups

from 1979 until his retirement in 2005. Mr. Hall is currently a director of Metamaterial Technologies, Millar

Western Forest Products Ltd., Pattern Energy Group and Stanfield’s Ltd., as well as a member of the

Advisory Board of Southwest Properties Ltd.

Randall C. Barnes

Prior to his retirement in 1997, Mr. Barnes spent four years as Senior Vice President and Treasurer of

PepsiCo, Inc., where he was employed since 1987. He was President of the Pizza Hut International division

from 1991 to 1993, and prior to that time Senior Vice President, Strategic Planning and New Business

Development. Mr. Barnes is a trustee of over 100 NYSE-listed closed-end funds, exchange-traded funds

and open-end funds advised, administered or serviced by Guggenheim Funds in the United States.

A brief description of the background of Mr. Seif and Mr. Bartholomew is listed under the heading

“Organization and Management Details of the Funds – Officers and Directors of the Manager, Promoter

and Trustee” below.

The independent members of the Company’s board of directors are paid a fixed annual fee of $9,000 for

their services as members of the board of directors. The Company also reimburses all members of the board

of directors for out-of-pocket expenses for attending meetings of the board of directors and committees of

the board of directors.

Officers and Directors of the Manager, Promoter and Trustee

The board of directors of the Manager consists of a minimum of 3 and a maximum of 10 directors. The

board of directors is currently composed of 3 directors. Directors are appointed to serve on the board of

directors until such time as they retire or are removed and successors are appointed. The name and

municipality of residence of each of the directors and executive officers of Purpose (a) the manager and

promoter of the PFC Funds, and (b) the trustee, manager and promoter of the Purpose Trust Funds, and

their principal occupations are as follows:

Name and

Municipality of

Residence Position with the Manager Principal Occupation

SOM SEIF

Toronto, Ontario

President, Chief Executive

Officer and Chairman of the

Board of Directors and Director

President and Chief Executive Officer

of Purpose Investments Inc.

SCOTT BARTHOLOMEW

Milton, Ontario

Chief Operating Officer, Chief

Financial Officer, Secretary and

Director

Chief Operating Officer and Chief

Financial Officer of Purpose

Investments Inc.

JEFFREY MITELMAN

Montreal, Quebec

Director President and Secretary of Thinking

Capital Financial Corporation

CAITLIN GOSSAGE Toronto, Ontario

Chief Compliance Officer and

Senior Legal Counsel

Chief Compliance Officer and Senior

Legal Counsel of Purpose Investments

Inc.

89

A description of the experience and background relevant to the business of the Funds of each of the directors

and officers of the Manager is set out below.

Som Seif

Som Seif is the founder and Chief Executive Officer of Purpose which he formed following the sale of

Claymore Investments, Inc. (“Claymore”) to BlackRock Inc. in March 2012. Mr. Seif started Claymore in

Canada in January 2005 and was the former President and Chief Executive Officer leading the

implementation of the company’s business development and corporate strategies. Over the seven years of

its operation, Claymore organically grew to $8 billion in assets and established itself as a Canadian leader

in bringing intelligent, low-cost exchange-traded funds to investors through its family of thirty-four

exchange-traded funds across broad asset classes.

Prior to joining Claymore, Mr. Seif was an investment banker with RBC Capital Markets, where he worked

since 1999. He played a key role in developing the structured products group at RBC Capital Markets in

both Canada and the U.S., where he structured and raised capital for both Canadian and U.S. asset managers.

Mr. Seif is a CFA charterholder and has a Bachelor of Applied Science with an emphasis on Industrial and

Systems Engineering from the University of Toronto.

Scott Bartholomew

Scott Bartholomew is the Chief Operating Officer, Chief Financial Officer and Secretary of Purpose. He

has over 21 years of experience in the Canadian investment fund industry. Mr. Bartholomew was an integral

part in the development of the Canadian mutual fund services business during his 14 years at State Street

Fund Services Toronto Inc. as Assistant Vice-President of Fund Administration. From 2008 until 2012 Mr.

Bartholomew ran the operations for Claymore and, in 2011, he became the Chief Compliance Officer of

the firm. Upon the sale of Claymore to BlackRock in 2012 Mr. Bartholomew assisted BlackRock in the

transition and integration of the Claymore business leaving BlackRock in late 2012 to start Purpose with

other partners. He has a Bachelor of Commerce from Ryerson University and is a CFA charterholder.

Jeffrey Mitelman

Jeffrey Mitelman is a Director of Purpose. Mr. Mitelman is also the Co-Founder, President and Secretary

of Thinking Capital Financial Corporation (“Thinking Capital”). Mr. Mitelman co-founded Thinking

Capital in 2006. Over the last 20 years, Mr. Mitelman has built his career by challenging the status quo in

financial services. Before it was labelled as Fintech, Mr. Mitelman worked from a belief that products and

services that have been offered the same way for decades were due for a change. Recognizing the gap

between what was needed versus what was being offered, Mr. Mitelman was set on building businesses

focused on those who were underserved. He is a graduate of McGill University and a proud recipient of the

E&Y Entrepreneur of the Year award.

Caitlin Gossage

Caitlin Gossage is the Chief Compliance Officer and Senior Legal Counsel of Purpose. Prior to joining

Purpose Ms. Gossage acted as Chief Compliance Officer of BMO Global Asset Management (Canada) and

worked in compliance at the Bank of Montreal supporting the asset management business. Ms. Gossage is

a lawyer by training and articled and worked as an associate at Osler Hoskin & Harcourt LLP. She has a

Bachelor of Arts from McGill University, a J.D. from Windsor University and an L.L.M from Jean Moulin,

Lyon III in France. She was called to the Ontario bar in 2011.

90

The Manager, Promoter and Trustee

Purpose Investments Inc. a corporation amalgamated under the laws of the Province of Ontario on March

31, 2018 is (a) the manager and promoter of the PFC Funds and (b) the manager, promoter and trustee of

the Purpose Trust Funds and is responsible for the administration of the Funds. The equity securities of the

Manager are owned by Purpose LP and Purpose GP Inc. Purpose is located at 130 Adelaide Street West,

Suite 1700, Toronto, Ontario, M5H 3P5.

Duties and Services to be Provided by the Manager – PFC Funds

The Company has retained the Manager to manage and administer the day-to-day business and affairs of

the PFC Funds. The Manager is responsible for providing managerial, administrative and compliance

services to the PFC Funds pursuant to the Management Agreement, including, without limitation, acquiring

or arranging to acquire securities on behalf of the PFC Funds, calculating the NAV of the Funds and NAV

per share of the Funds, net income and net realized capital gains of the Funds, authorizing the payment of

operating expenses incurred on behalf of the Funds, preparing financial statements and financial and

accounting information as required by the Funds, ensuring that securityholders are provided with financial

statements (including interim and annual financial statements) and other reports as are required by

applicable law from time to time, ensuring that the Funds comply with regulatory requirements and

applicable stock exchange listing requirements, preparing the Funds’ reports to shareholders and the

securities regulatory authorities, determining the amount of distributions to be made by the Funds and

negotiating contractual agreements with third-party providers of services, including the Designated

Brokers, the Custodian, the registrar and transfer agent, the auditor and printers. The Manager may from

time to time employ or retain any other person or entity to perform, or to assist the Manager in the

performance of management, administrative and investment advisory services to all or any portion of the

Company’s assets and in performing other duties of the Manager as set out in the Management Agreement.

The Manager has delegated certain of its duties and powers to the Investment Advisor and certain other

service providers of the Company.

Duties and Services to be Provided by the Manager – Purpose Trust Funds

The Purpose Trust Funds have retained the Manager to manage and administer the day-to-day business and

affairs of the Funds. The Manager is responsible for providing managerial, administrative and compliance

services to the Funds pursuant to the Declaration of Trust, including, without limitation, acquiring or

arranging to acquire securities on behalf of the Funds, calculating the NAV of the Funds and NAV per unit

of the Funds, net income and net realized capital gains of the Funds, authorizing the payment of operating

expenses incurred on behalf of the Funds, preparing financial statements and financial and accounting

information as required by the Funds, ensuring that securityholders are provided with financial statements

(including interim and annual financial statements) and other reports as are required by applicable law from

time to time, ensuring that the Funds comply with regulatory requirements and applicable stock exchange

listing requirements, preparing a Fund’s reports to unitholders and the securities regulatory authorities,

determining the amount of distributions to be made by a Fund and negotiating contractual agreements with

third-party providers of services, including the Designated Brokers, the Custodian, the Registrar and

Transfer Agent, the auditor and printers. The Manager may from time to time employ or retain any other

person or entity to perform, or to assist the Manager in the performance of management, administrative and

investment advisory services to all or any portion of a Purpose Trust Fund’s assets and in performing other

duties of the Manager as set out in the Declaration of Trust. The Manager has delegated certain of its duties

and powers to the Investment Advisor and certain other service providers of the Purpose Trust Funds.

91

Details of the Management Agreement – PFC Funds

The Management Agreement will continue indefinitely unless otherwise terminated in accordance with its

terms.

The Manager will be required to exercise the powers and discharge the duties of its office honestly, in good

faith and in the best interests of the Company and the PFC Funds, and in connection therewith, to exercise

the degree of care, diligence and skill that a reasonably prudent person would exercise in the circumstances.

The Manager and each of its securityholders, directors, officers, employees and agents will be indemnified

and saved harmless by the Company for all liabilities, costs and expenses incurred in connection with any

claim, action, suit or proceeding that is proposed or commenced or any other claim that is made against the

Manager or any of its securityholders, directors, officers, employees or agents in the exercise of the

Manager’s duties if they do not result from wilful misconduct, bad faith, negligence or reckless disregard

of the Manager’s duties, breach of its obligations as manager under the Management Agreement or failure

to meet the standard of care set out above. The Manager will be able to assign its interest in the Management

Agreement to an affiliate or a successor to all or substantially all of its business.

Under the terms of the Management Agreement, any directors, officers or employees of the Manager who

are also officers of the Company shall be paid by the Manager for serving in such capacity and shall not

receive any remuneration directly from the Company.

The Manager is entitled to fees for its services as manager under the Management Agreement as described

under “Fees and Expenses – Management Fees”. In addition, the Manager and its affiliates and each of their

directors, officers, employees and agents will be indemnified by the PFC Funds for all liabilities, costs and

expenses incurred in connection with any action, suit or proceeding that is proposed or commenced or other

claim that is made against any of them in the exercise of the Manager’s duties under the Management

Agreement, if they do not result from the Manager’s wilful misconduct, bad faith, negligence or breach of

its obligations thereunder.

The management services of Purpose are not exclusive and nothing in the Management Agreement or any

agreement prevents Purpose from providing similar services to other investment funds and other clients

(whether or not their investment objectives and policies are similar to those of the PFC Funds) or from

engaging in other business activities.

Purpose has taken the initiative in founding and organizing the PFC Funds and is, accordingly, the promoter

of the PFC Funds within the meaning of securities legislation of certain Provinces and Territories of Canada.

Details of the Declaration of Trust – Purpose Trust Funds

Purpose is required to exercise its powers and discharge its duties honestly, in good faith and in the best

interests of unitholders of each of the Purpose Trust Funds, and in connection therewith, to exercise the

degree of care, diligence and skill that a reasonably prudent trustee and manager would exercise in similar

circumstances.

Purpose may resign as trustee, manager and/or portfolio manager of a Purpose Trust Fund upon 60 days’

notice to the unitholders. If the Manager resigns it may appoint its successor but, unless its successor is an

affiliate of the Manager, its successor must be approved by the unitholders. If the Manager is in material

default of its obligations under the Declaration of Trust and such default has not been cured within 30 days

after notice of the same has been given to the Manager, the unitholders may remove the Manager and

appoint a successor trustee and/or manager.

92

The Manager is entitled to fees for its services as manager under the Declaration of Trust as described under

“Fees and Expenses – Management Fees”. In addition, the Manager and its affiliates and each of their

directors, officers, employees and agents will be indemnified by the Purpose Trust Funds for all liabilities,

costs and expenses incurred in connection with any action, suit or proceeding that is proposed or

commenced or other claim that is made against any of them in the exercise of the Manager’s duties under

the Declaration of Trust, if they do not result from the Manager’s wilful misconduct, bad faith, negligence

or breach of its obligations thereunder.

The services of the Manager are not exclusive and nothing in the Declaration of Trust or any agreement

prevents the Manager from providing similar services to other investment funds and other clients (whether

or not their investment objectives and policies are similar to those of the Purpose Trust Funds) or from

engaging in other business activities.

Purpose has taken the initiative in founding and organizing the Purpose Trust Funds and is, accordingly,

the promoter of the Funds within the meaning of securities legislation of certain Provinces and Territories

of Canada.

The Investment Advisor

Purpose has retained Neuberger Berman Breton Hill ULC (“NBBH”) to provide investment sub-advisory

services to the Funds pursuant to the terms of an investment advisory agreement between Purpose, on behalf

of the Funds and NBBH (formerly, Breton Hill Capital Ltd.) dated January 28, 2013, as amended (the

“Investment Advisory Agreement”).

Investment advisory services will initially be provided to the Funds by a portfolio management team

consisting of Ray Carroll, Simon Griffiths and Frank Maeba. The members of the portfolio management

team have distinct and complementary skills and professional experience managing North American

equities and derivative strategies. The name, title and length of service by persons employed by NBBH who

are principally responsible for providing investment advisory services in respect of the funds are shown in

the table below:

Key Personnel of the Investment Advisor

The team that will be primarily responsible for the portfolio of the each of the Funds includes the following

personnel:

Name and

Municipality of

Residence

Position with the Investment Advisor Years with the Investment

Advisor

RAY CARROLL

Toronto, Ontario

Managing Partner and Chief Investment

Officer

Since inception of Breton

Hill Capital Ltd. on March

18, 2010

SIMON GRIFFITHS

Toronto, Ontario

Managing Partner, Head of Research Since inception of Breton


18, 2010

FRANK MAEBA

Toronto, Ontario

Managing Partner, Head of Trading Since inception of Breton


18, 2010

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A description of the experience and background relevant to the business of the Funds for each of the above

key personnel of the Investment Advisor is set out below.

Ray Carroll

Ray Carroll is a Managing Partner and the Chief Investment Officer of NBBH. Mr. Carroll is ultimately

responsible for fund performance, investment decisions and risk management. He co-founded Breton Hill

Capital Ltd. after 14 years of capital markets and alternative investing experience. Previously, Mr. Carroll

joined the 2004 launch of Diversified Global Asset Management (“DGAM”), a multi-billion dollar

alternative investment firm where he was a Managing Director, Chief Investment Officer and served on the

Management Committee. Mr. Carroll started his career as Senior Manager at Royal Bank of Canada and

Vice President at RBC Capital Markets. He holds a Ph.D. in mathematics from the University of Florida in

the field of inverse problems and is a CFA charterholder.

Simon Griffiths

Simon Griffiths is a Managing Partner of NBBH, where he leads investment research and is a member of

the portfolio management team. Mr. Griffiths is responsible for finding sources of alpha and developing

trading tools to exploit them. He has over 18 years of experience applying investment research to

institutional portfolios. Prior to co-founding Breton Hill Capital Ltd., Mr. Griffiths co-founded the direct

trading business at DGAM in Toronto where he was a portfolio manager and was responsible for all

research. Mr. Griffiths joined DGAM from Northwater Capital Management Inc., an alternative investment

firm which had $10 billion in assets under management where he was responsible for quantitative

investment research and software development. Mr. Griffiths holds an M.Sc. in applied statistics from

University of Guelph and is a CFA charterholder.

Frank Maeba

Frank Maeba is a Managing Partner of NBBH. Mr. Maeba has over 20 years of macro trading experience

and is responsible for executing portfolio strategies, managing risks through optimal structuring of positions

and identifying investment opportunities. Previously, Mr. Maeba worked at DGAM where he was Head

Trader for a multi-strategy fund, trading cash instruments and derivatives across equities, rates, foreign

exchange, commodities and credit. Prior to working at DGAM, Mr. Maeba was a Director with RBC Capital

Markets where he traded foreign exchange and commodity option portfolios, and managed the London

derivatives desk. Mr. Maeba earned a B.Sc. (Hons) from University of Western Ontario and is a CFA

charterholder.

Details of the Investment Advisory Agreement

Pursuant to the Investment Advisory Agreement, the Investment Advisor will manage the assets held by

the Funds in accordance with each Fund’s investment objectives and investment strategies and subject to

its investment restrictions. The Investment Advisory Agreement will continue indefinitely unless otherwise

terminated in accordance with its terms. In consideration for the services provided by the Investment

Advisor pursuant to the Investment Advisory Agreement, the Investment Advisor will receive from the

Manager a fee, in an amount to be agreed upon by the Manager and the Investment Advisor from time to

time, payable out of the Management Fee.

Under the Investment Advisory Agreement, the Investment Advisor will be required to exercise its powers

and discharge its duties honestly, in good faith and in the best interests of the Funds and their securityholders

and must exercise the degree of care, diligence and skill that a reasonably prudent person would exercise

in comparable circumstances. The Investment Advisor will not be liable in carrying out its duties under the

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Investment Advisory Agreement, including for any loss or diminution in value of a Fund’s assets or any

loss or damage caused to a Fund or any securityholder relating to permitted loans or indebtedness of a Fund

or for any insufficiency of income from or any depreciation in the value of any investments in or upon

which any of the moneys of, or belonging to, the Fund shall be invested or by virtue of the acquisition or

disposition of any such investments or for any other loss or damage to a Fund’s assets which may occur

during or in the course of the performance by the Investment Advisor of its rights, duties, powers,

discretions, authorities, obligations and responsibilities under the Investment Advisory Agreement, except

to the extent that the loss or damage results from the wilful misconduct, gross negligence or reckless

disregard of the Investment Advisor’s duties, obligations and responsibilities or if the Investment Advisor

has failed to meet the standard of care set out above.

The Investment Advisor and each of its directors, officers, employees and agents will be indemnified and

saved harmless by the Manager and the Company for all liabilities, costs and expenses incurred in

connection with any claim, action, suit or proceeding that is proposed or commenced or any other claim

that is made against the Investment Advisor or any of its officers, directors, employees or agents in the

exercise of the Investment Advisor’s duties if they do not result from the wilful misconduct, gross

negligence or reckless disregard of the Investment Advisor’s duties, obligations and responsibilities or

failure to meet its standard of care.

Brokerage Arrangements

The Manager utilizes various brokers to effect securities transactions on behalf of the Funds. These brokers

may directly provide the Manager with research and related services including advice, both directly and in

writing, as to the value of the securities; the availability of securities, or purchasers or sellers of securities;

as well as analysis and reports concerning issuers, industries, securities, economic factors and trends.

Although each Fund may not benefit equally from the research and related service received from a broker,

the Manager will endeavour to ensure that all of the Funds receive an equitable benefit over time.

The Manager maintains a list of brokers that have been approved to effect securities transactions on behalf

of the Funds. When determining whether a broker should be added to that list there are numerous factors

that are considered including: (a) the dealer’s reliability, (b) the quality of its execution services on a

continuing basis, and (c) its financial condition. When more than one dealer is believed to meet these

criteria, preference may be given to dealers who provide research or statistical materials or other services

to the Funds or to the Manager or its affiliates.

Approved brokers are monitored on a regular basis to ensure that the value of the goods and services, as

outlined above, provides a reasonable benefit as compared to the amount of brokerage commissions paid

for the goods and services. In conducting this analysis, the Manager considers the use of the goods and

services, execution quality in terms of trade impact and the ability to achieve the target benchmark price,

as well as the amount of brokerage commissions paid relative to other brokers and the market in general.

The monitoring processes are the same regardless of whether the broker is affiliated with the Manager or is

an unrelated third party.

Additional information including the services supplied by each broker can be obtained at no cost by

contacting the Manager at [email protected].


The Manager has appointed an independent review committee (“IRC”) for the Funds pursuant to NI 81-

107. The IRC currently consists of three members, each of whom is an independent director of the Company

and independent of the Manager.

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The mandate of the IRC is to review conflict of interest matters identified and referred to the IRC by the

Manager and to give an approval or a recommendation, depending on the nature of the conflict of interest

matter. At all times, the members of the IRC are required to act honestly and in good faith in the best

interests of the Funds and, in connection therewith, will exercise the degree of care, diligence and skill that

a reasonably prudent person would exercise in comparable circumstances.

The Manager has established written policies and procedures for dealing with each conflict of interest

matter. At least annually, the IRC will review and assess the adequacy and effectiveness of the Manager’s

written policies and procedures relating to conflict of interest matters and will conduct a self-assessment of

the IRC’s independence, compensation and effectiveness.

The Manager will maintain records of all matters and/or activities subject to the review of the IRC, including

a copy of the Manager’s written policies and procedures dealing with conflict of interest matters, minutes

of IRC meetings, and copies of materials, including any written reports, provided to the IRC. The Manager

will also provide the IRC with assistance and information sufficient for the IRC to carry out its

responsibilities under NI 81-107.

The members of the IRC are entitled to be compensated by the Funds and reimbursed for all reasonable

costs and expenses for the duties they perform as IRC members. In addition, the members of the IRC are

entitled to be indemnified by the Funds, except in cases of wilful misconduct, bad faith, negligence or

breach of their standard of care.

The name and municipality of residence of each of the members of the IRC is as follows:

Name Municipality of Residence

DOUGLAS G. HALL1

Halifax, Nova Scotia

RANDALL C. BARNES

Las Vegas, Nevada

JEAN M. FRASER

Toronto, Ontario

Note:

(1) Chair of the IRC.

The initial compensation and reimbursement policy for costs and expenses of the IRC was established by

Purpose. As at the date hereof, each IRC member will be paid an annual fee of $5,000, plus $400 per fund

managed by Purpose, per meeting, subject to a maximum of $70,000 per member per annum over all funds

managed by Purpose, for the duties they perform as IRC members in relation to the Funds. Members are

also entitled to be reimbursed for all reasonable expenses incurred in the performance of their duties. The

annual retainer is apportioned among the funds managed by the Manager for which the IRC acts in a manner

that is fair and reasonable.

For the year ended December 31, 2017, members of the IRC received annual fees and meeting fees in the

amount of $180,973.43, as well as $8,986 as reimbursement for expenses in connection with performing their

duties for the Funds and certain other funds managed by Purpose. These fees and expenses were allocated

among the funds managed by Purpose in a manner that was fair and reasonable.

The IRC is subject to requirements to conduct regular assessments and, for each financial year of the Funds,

will prepare a report to securityholders that describes the IRC and its activities for the financial year. A

copy of this report can be obtained from the Manager upon request, at no cost, by contacting the Manager

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at [email protected]. A copy is also available on Purpose’s website at www.purposeinvest.com or

on SEDAR at www.sedar.com.

Custodian and Securities Lending Agent

PFC Funds

Pursuant to the PFC Custodian Agreement CIBC Mellon Trust Company is the custodian of the assets of

the PFC Funds. The address of the Custodian is 320 Bay Street, P.O. Box 1, 6th Floor, Toronto, Ontario,

M5H 4A6. The Manager, on behalf of the PFC Funds, or the Custodian may terminate the PFC Custodian

Agreement upon at least 90 days’ written notice or immediately in the event of a bankruptcy event in respect

of a party that is not cured within 30 days. The Manager, on behalf of the Funds, may terminate the PFC

Custodian Agreement immediately if the Custodian ceases to be qualified to act as a custodian of the PFC

Funds under applicable law. The Custodian is entitled to receive fees from the Manager as described under

“Fees and Expenses” and to be reimbursed for all expenses and liabilities that are properly incurred by the

Custodian in connection with the activities of the PFC Funds.

Purpose Trust Funds

Pursuant to the PTF Custodian Agreement, CIBC Mellon Trust Company is the custodian of the assets of

the Purpose Trust Funds. The address of the Custodian is 320 Bay Street, P.O. Box 1, 6th Floor, Toronto,

Ontario, M5H 4A6. The Manager, on behalf of the Purpose Trust Funds, or the Custodian may terminate

the PTF Custodian Agreement upon at least 90 days’ written notice or immediately in the event of a

bankruptcy event in respect of a party that is not cured within 30 days. The Manager, on behalf of the

Purpose Trust Funds, may terminate the PTF Custodian Agreement immediately if the Custodian ceases to

be qualified to act as a custodian of the Purpose Trust Funds under applicable law. The Custodian is entitled

to receive fees from the Manager as described under “Fees and Expenses” and to be reimbursed for all

expenses and liabilities that are properly incurred by the Custodian in connection with the activities of the

Purpose Trust Funds.

Securities Lending Agreement

CIBC Mellon Trust Company is also the securities lending agent of the Funds pursuant to a securities

lending authorization agreement between Purpose, in its capacity as manager of the Funds, CIBC Mellon

Trust Company, CIBC Mellon Global Securities Services Company, Canadian Imperial Bank of Commerce

and The Bank of New York Mellon dated February 12, 2013, as amended (the “Securities Lending

Agreement”). In accordance with the Securities Lending Agreement, CIBC Mellon Trust Company will

value the loaned securities and the collateral daily to ensure that the collateral is worth at least 102% of the

value of the securities. Pursuant to the terms of the Securities Lending Agreement, CIBC Mellon Trust

Company, CIBC Mellon Global Securities Services Company, Canadian Imperial Bank of Commerce and

The Bank of New York Mellon will indemnity and hold harmless the Manager, on behalf of the Funds from

all losses, damages, liabilities, costs or expenses (including reasonable counsel fees and expenses but

excluding consequential damages) suffered by the Manager or the Fund(s) arising from (a) the failure of

the Lending Agent (as defined in the Securities Lending Agreement) or CIBC Mellon Trust Company to

perform any obligations under the Securities Lending Agreement or (b) any inaccuracy of any

representation or warranty made by CIBC Mellon Trust Company or the Lending Agent in the Securities

Lending Agreement. Either party may terminate the Securities Lending Agreement by giving the other

parties 30 days’ notice. The Lending Agent is not an affiliate or an associate of the Manager. See

“Investment Strategies – Securities Lending”.


http://www.purposeinvest.com/

http://www.sedar.com/

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Auditor

Ernst & Young LLP, at its principal offices in Toronto, is the auditor for the Funds.

Registrar and Transfer Agent and Plan Agent


TSX Trust Company, at its principal offices in Toronto, is the registrar and transfer agent and plan agent

for the ETF Shares of the PFC Funds and the ETF Units of the Purpose Trust Funds. The register and

transfer ledger for the ETF Shares and ETF Units of the Funds is kept in Toronto.


CIBC Mellon Global Securities Services Company, at its principal offices in Toronto, is the registrar and

transfer agent for the Mutual Fund Shares of the PFC Funds and the Mutual Fund Units of the Purpose

Trust Funds. The register and transfer ledger for the Funds is kept in Toronto.

Promoter

The Manager took the initiative in creating the Company and the Funds and, accordingly, is a promoter as

defined in the securities legislation of certain Provinces and Territories of Canada. Except as otherwise

described herein, the Manager will not receive any benefits, directly or indirectly, from the issuance of

securities of the Funds offered hereunder.

CALCULATION OF NET ASSET VALUE

The NAV of each Fund and NAV per share of each series or per unit of each class of each Fund will be

calculated by the Valuation Agent as of the Valuation Time on each Valuation Date. The NAV of the each

series or each class of a Fund, as the case may be, on a particular date will be equal to the aggregate value

of the assets of the Fund attributable such series or class, as applicable, less the aggregate value of the

liabilities of the Fund attributable to the shares of each series or units of each class, as applicable, including

any income, net realized capital gains or other amounts payable to securityholders of the Fund on or before

such date and the value of the liabilities of the Fund for management fees, expenses and taxes, expressed

in Canadian dollars at the applicable exchange rate on such date. The NAV per share of each series or per

unit of each class of a Fund, as applicable, on any day will be obtained by dividing the NAV of the series

or class of a Fund, as applicable, on such day by the number of shares of the series or units of the class, as

applicable, of the Fund then outstanding.

Valuation Policies and Procedures

In determining the NAV of a series of shares or the NAV of a class of units, as the case may be, of a Fund

at any time, the Valuation Agent uses the following principles:

(a) the value of any cash on hand or on deposit, bills and demand notes and accounts receivable,

prepaid expenses, cash dividends and interest declared or accrued and not yet received, are valued

at the full amount or at what the Manager consider to be the fair value;

(b) bonds, debentures and other debt securities shall be marked-to-market based on prices obtained

from a recognized pricing service at the Valuation Time on the Valuation Date. Short-term

investments, including notes and money market instruments, shall be recorded at their fair value;

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(c) any security that is listed or dealt in on a stock exchange shall be valued at the closing sale price

(or such other value as the securities regulatory authorities may permit) last reported at the

Valuation Time on the Valuation Date on the principal stock exchange on which such security is

traded, or, if no reliable closing sale price is available at that time, the security shall be fair valued;

(d) securities of any mutual funds held by a Fund shall be valued at the reported net asset value of that

mutual fund;

(e) foreign currency accounts shall be expressed in Canadian dollars on the following basis: (i)

investments and other assets shall be valued by applying the applicable exchange rate at the end of

the relevant valuation period; and (ii) purchases and sales of investments, income and expenses

shall be recorded by applying the applicable exchange rate on the dates of such transactions;

(f) a Fund’s holdings shall be valued in Canadian dollars before the NAV of the shares or units, as the

case may be, of the Fund is calculated;

(g) forward foreign exchange contracts shall be valued as the difference between the value of the

contract on the date the contract was originated and the value of the contract on the Valuation Date.

Foreign exchange options shall be valued at their quoted market value. When the contract or option

closes or expires, a realized foreign exchange gain or loss shall be recognized;

(h) forward contracts shall be valued as the difference between the current price and the purchase price

(i.e. the mark-to-market value of the contract);

(i) clearing corporation options shall be valued at the current market value;

(j) should a Fund write a covered clearing corporation option, the premium received shall be

considered a deferred credit with a value equal to the current market value of an option that would

have the effect of closing the position. Any difference resulting from revaluation will be treated as

an unrealized gain or loss. Deferred credits will be deducted to arrive at the net asset value of the

Fund;

(k) futures contracts shall be valued at the outstanding current margin payable or receivable;

(l) bullion, coins, certificates or other evidences of precious metals shall be valued at current market

value;

(m) restricted securities shall be valued according to reported quotations in common use, or according

to the following method, whichever is less: restricted securities shall be valued at that percentage

of the market value of unrestricted securities which the Fund paid to acquire them, provided that if

the time period during which the restrictions on these securities will apply is known, the price may

be adjusted to reflect this time period;

(n) all other assets shall be valued at our best estimate of fair value; and

(o) if any investment cannot be valued under the foregoing rules or if the foregoing rules are at any

time considered by the Valuation Agent to be inappropriate under the circumstances, then,

notwithstanding the foregoing rules, the Valuation Agent shall make such valuation as it considers

fair and reasonable.

The value of any security or property to which, in the opinion of the Valuation Agent, the above valuation

principles cannot be applied (whether because no price or yield equivalent quotations are available as above

provided, or for any other reason) shall be the fair value thereof determined in such manner as the Valuation

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Agent from time to time provides. The Manager may also determine the fair value of securities in the

following circumstances: (a) when there is a halt trade on a security which is normally traded on an

exchange; (b) on securities that trade on markets that have closed prior to the time of calculation of the

NAV of the Fund and for which there is sufficient evidence that the closing price on the market is not the

most appropriate value at the time of valuation; and (c) when there are investment or currency restrictions

imposed by a country that affect the Fund’s ability to liquidate the assets held in that market.

Each portfolio transaction will be reflected in the calculation of NAV per share or unit, as the case may be,

no later than the calculation of NAV per share or unit, as applicable, next made after the date on which the

transaction becomes binding. The issue of shares or units, as the case may be, will be reflected in the

calculation of NAV per share or unit, as applicable, next made after the issue date for such shares or units,

which may be up to two Trading Days after the date that the subscription order for such shares or units is

accepted. The exchange or redemption of shares or units, as the case may be, will be reflected in the

calculation of NAV per share or unit, as applicable, next made after the exchange request or redemption

request is accepted.

The NAV per share of a series or unit of a class, as the case may be, is calculated in Canadian dollars in

accordance with the rules and policies of the Canadian securities administrators or in accordance with any

exemption therefrom that the Fund may obtain. The NAV per share of a series or unit of a class, as

applicable determined in accordance with the principles set out above may differ from the NAV per share

or per unit, as the case may be, determined under International Financial Reporting Standards.

Reporting of Net Asset Value

Following the Valuation Time on any Valuation Date, the NAV of each Fund and NAV per ETF Share,

Series A Share, Series F Share, Series I Share, Series D Share, XA Share, XF Share or ETF Unit, Class A

Unit, Class F Unit, Class I Unit and Class D Unit, as the case may be, of each Fund will usually be published

in the financial press and will be posted on Purpose’s website at www.purposeinvest.com.

DESCRIPTION OF THE SECURITIES DISTRIBUTED

Description of the Securities Distributed – PFC Funds

Each of the PFC Funds is authorized to issue an unlimited number of redeemable, transferable shares of

each series. The shares of the PFC Funds may be Canadian dollar or U.S. dollar denominated.

Description of the Securities Distributed – Purpose Trust Funds

Each Purpose Trust Fund is authorized to issue an unlimited number of redeemable, transferable units of

an unlimited number of classes of units, each of which represents an equal, undivided interest in the net

assets of the Fund. The units of the Purpose Trust Funds may be Canadian dollar or U.S. dollar denominated.

On December 16, 2004, the Trust Beneficiaries’ Liability Act, 2004 (Ontario) came into force. This statute

provides that holders of units of a trust are not, as beneficiaries, liable for any default, obligation or liability

of the trust if, when the default occurs or the liability arises: (a) the trust is a reporting issuer under the

Securities Act (Ontario); and (b) the trust is governed by the laws of the Province of Ontario. Each Purpose

Trust Fund is a reporting issuer under the Securities Act (Ontario) and is governed by the laws of the

Province of Ontario by virtue of the provisions of the Declaration of Trust.


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Certain Provisions of the Shares – PFC Funds

All shares of a series of the PFC Funds have equal rights and privileges. While shares are non-voting shares,

each share of a series is entitled to one vote at all meetings of shareholders (including at any meetings held

exclusively for shareholders of that series) to consider the matters set forth below under “Securityholder

Matters – Matters Requiring Securityholders’ Approval”. Each shareholder of a series is entitled to

participate equally with respect to any and all distributions made by the Fund to shareholders including

distributions of net income and net realized capital gains and distributions upon the termination of the Fund.

Shares of the PFC Fund are issued only as fully-paid and are non-assessable.

Certain Provisions of the Units – Purpose Trust Funds

All units of a class of a Purpose Trust Fund have equal rights and privileges. Each whole unit is entitled to

one vote at all meetings of unitholders and is entitled to participate equally with respect to any and all

distributions made by the Purpose Trust Fund to unitholders, other than management fee distributions,

including distributions of net income and net realized capital gains and distributions upon the termination

of the Purpose Trust Fund. Units are issued only as fully-paid and are non-assessable.

Exchange of Securities for Baskets of Securities – ETF Shares/ETF Units

On any Trading Day, holders of ETF Shares and/or ETF Units may exchange the Prescribed Number of

Securities (or an integral multiple thereof) of a Fund for Baskets of Securities and cash. See “Redemption,

Exchange and Switches of Securities – Exchange of Securities for Baskets of Securities”.

Redemption of Securities for Cash


On any Trading Day, holders of ETF Shares and/or ETF Units may redeem ETF Shares or ETF Units, as

the case may be, of a Fund for cash at a redemption price per ETF Share or ETF Unit, as applicable, of the

Fund, equal to the lesser of (a) (i) in respect of the ETF Shares, 95% of the closing price for the ETF Shares

on the TSX and (ii) in respect of the ETF Units, 95% of the market price of the ETF Units, on the effective

date of redemption and (b) the NAV per ETF Share or ETF Unit, as the case may be. “Market price” means

the weighted average trading price of the ETF Units on the Canadian marketplaces on which the ETF Units

have traded on the effective date of redemption. See “Redemption, Exchange and Switches of Securities –

Redemption of Securities for Cash – ETF Shares/ETF Units”.

Mutual Fund Shares

On any Valuation Date, holders of shares of a series of a PFC Fund (other than Series XA Shares and Series

XF Shares) may redeem their shares for cash at a redemption price per share equal to the NAV per share

on such Valuation Date. Holders of Series XA Shares and Series XF Shares must switch to a separate series

of shares of the Purpose In-Kind Exchange Fund in order to redeem their shares.

Mutual Fund Units

On any Valuation Date, holders of units of a class of a Purpose Trust Fund may redeem their units for cash

at a redemption price per unit equal to the NAV per unit on such Valuation Date.

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No Voting Rights

Holders of ETF Shares, Mutual Fund Shares, ETF Units and Mutual Fund Units will not have any right to

vote securities held by the Funds, unless otherwise agreed to by the Manager.

Redemption by the Company of Series XA Shares and Series XF Shares

The Manager may at any time, and from time to time, redeem all or a portion of the Series XA Shares

and/or Series XF Shares that an investor holds in its sole discretion.

Modification of Terms

PFC Funds

The rights attached to the shares of the PFC Funds may only be modified, amended or varied in accordance

with the terms of the articles of the Company and applicable law. See “Securityholder Matters – Matters

Requiring Securityholders’ Approval”.

Purpose Trust Funds

The rights attached to the units of a Purpose Trust Fund may only be modified, amended or varied in

accordance with the terms of the Declaration of Trust. See “Securityholder Matters – Matters Requiring

Securityholders’ Approval”.

SECURITYHOLDER MATTERS

Meeting of Shareholders – PFC Funds

A meeting of the shareholders voting as a single class (unless the circumstances are such that one series is

affected differently in which case the holders of each series of a class of shares of the Company will vote

separately) may be called at any time by the Manager. Except as otherwise required or permitted by law,

meetings of shareholders will be held if called by the Manager upon written notice of not less than 21 days

nor more than 50 days before the meeting. At any meeting of shareholders, a quorum shall consist of two

or more shareholders present in person or by proxy and holding 5% of the shares of the Company. If no

quorum is present at such meeting within one-half hour after the time fixed for the holding of such meeting,

the meeting, if convened upon the request of shareholders or for the purpose of considering a change in the

manager of the Company, shall be cancelled, but in any other case, the meeting shall stand adjourned and

will be held at the same time and place on the day which is not less than 10 days later. Shareholders present

in person or represented by proxy will constitute a quorum.

Meeting of Unitholders – Purpose Trust Funds

A meeting of the unitholders voting as a single class (unless the circumstances are such that one class is

affected differently in which case the holders of each class of units of a Purpose Trust Fund will vote

separately) may be called at any time by the Manager. Except as otherwise required or permitted by law,

meetings of unitholders will be held if called by the Manager upon written notice of not less than 21 days

nor more than 50 days before the meeting. At any meeting of unitholders, a quorum shall consist of two or

more unitholders present in person or by proxy and holding 5% of the units of a Purpose Trust Fund. If no

quorum is present at such meeting within one-half hour after the time fixed for the holding of such meeting,

the meeting, if convened upon the request of unitholders or for the purpose of considering a change in the

manager of a Purpose Trust Fund, shall be cancelled, but in any other case, the meeting shall stand

102

adjourned and will be held at the same time and place on the day which is not less than 10 days later.

Unitholders present in person or represented by proxy will constitute a quorum.

Matters Requiring Securityholders’ Approval

As required by NI 81-102, a meeting of the securityholders of the Funds will be called to approve certain

changes as follows:

(a) the basis of the calculation of a fee or expense that is charged to the Fund is changed in a way that

could result in an increase in charges to a Fund, except where:

(i) the Fund is at arm’s length with the person or company charging the fee;

(ii) the securityholders have received at least 60 days’ notice before the effective date of the

change; and

(iii) the right to notice described in (ii) is disclosed in the prospectus of the Fund;

(b) a fee or expense is introduced that is to be charged to a Fund or directly to its securityholders by

the Fund or the Manager in connection with the holding of securities of the Fund that could result

in an increase in charges to the Fund or its securityholders;

(c) the Manager is changed, unless the new manager of the Fund(s) is an affiliate of the Manager;

(d) the fundamental investment objectives of a Fund is changed;

(e) a Fund decreases the frequency of the calculation of the NAV per share or unit, as the case may be;

(f) a Fund undertakes a reorganization with, or transfers its assets to, another mutual fund, if the Fund

ceases to continue after the reorganization or transfer of assets and the transaction results in the

securityholders of the Fund becoming securityholders in the other mutual fund, unless:

(i) the IRC has approved the change;

(ii) the Fund is being reorganized with, or its assets are being transferred to, another mutual

fund to which NI 81-102 and NI 81-107 apply and that is managed by the Manager, or an

affiliate of the Manager;

(iii) the securityholders have received at least 60 days’ notice before the effective date of the

change;

(iv) the right to notice described in (iii) is disclosed in the prospectus of the Fund; and

(v) the transaction complies with certain other requirements of applicable Canadian securities

legislation;

(g) a Fund undertakes a reorganization with, or acquires assets from, another mutual fund, if the Fund

continues after the reorganization or acquisition of assets, the transaction results in the

securityholders of the other mutual fund becoming securityholders of the Fund, and the transaction

would be a material change to the Fund; or

(h) any other matter which is required by law applicable to a Fund or otherwise to be submitted to a

vote of the securityholders of the Fund.

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Approval of securityholders will be deemed to have been given if expressed by resolution passed at a

meeting of securityholders duly called and held for the purpose of considering the same, by at least a

majority of the votes cast. Securityholders are entitled to one vote per whole share or unit, as the case may

be, held on the record date established for voting at any meeting of securityholders.

A Fund may, without securityholders’ approval, enter into a merger or other similar transaction that has the

effect of combining the Fund or its assets (a “Permitted Merger”) with any other investment fund or funds

managed by the Manager or an affiliate of the Manager that have investment objectives that are substantially

similar to those of the Fund, subject to:

(a) approval of the merger by the IRC;

(b) compliance with certain merger pre-approval conditions set out in section 5.6 of NI 81-102; and

(c) written notice to securityholders at least 60 days before the effective date of the merger.

In connection with a Permitted Merger, the merging funds will be valued at their respective net asset values

for the purpose of such transaction.

In addition, the auditor of the Fund may not be changed unless:

(a) the IRC has approved the change; and

(b) securityholders have received at least 60 days’ notice before the effective date of the change.

Amendments to the Declaration of Trust – Purpose Trust Funds

Except for changes to the Declaration of Trust that require the approval of unitholders as described above,

or the changes described below that do not require approval of or prior notice to unitholders, the Declaration

of Trust may be amended from time to time by the Manager upon not less than 30 days’ prior written notice

to unitholders.

The Declaration of Trust may be amended by the Manager without the approval of or notice to unitholders

for the following purposes: (a) to remove any conflicts or other inconsistencies which may exist between

any terms of the Declaration of Trust and any provisions of any law or regulation applicable to or affecting

a Purpose Trust Fund; (b) to make any change or correction in the Declaration of Trust which is of a

typographical nature or is required to cure or correct any ambiguity or defective or inconsistent provision,

clerical omission, mistake or manifest error contained therein; (c) to bring the Declaration of Trust into

conformity with applicable laws, rules and policies of the securities regulatory authorities or with current

practice within the securities industry, provided that any such amendment does not adversely affect the

rights, privileges or interests of unitholders; (d) to maintain, or permit the Manager to take such steps as

may be desirable or necessary to maintain the status of a Fund as a “mutual fund trust” for the purposes of

the Tax Act; (e) to change the tax year end of a Fund as permitted under the Tax Act; (f) to change the name

of a Fund; (g) to create additional classes of units of a Fund and to redesignate existing classes of units a

Fund, unless the rights attaching to such units are changed or are adversely affected thereby; (h) to provide

added protection to unitholders; or (i) if in the opinion of the Manager the amendment is not prejudicial to

unitholders and is necessary or desirable. Any amendments to the Declaration of Trust made by the Manager

without the consent of unitholders will be disclosed in the next regularly scheduled report to unitholders.

104

Reporting to Securityholders

The Funds’ fiscal year is the calendar year or such other fiscal period permitted under the Tax Act as the

Funds elect. The Manager will make available to securityholders such financial statements and other

continuous disclosure documents as are required by applicable law, including (a) unaudited interim and

audited annual financial statements of the Funds, prepared in accordance with International Financial

Reporting Standards and (b) interim and annual management reports of fund performance in respect of the

Funds.

Any tax information necessary for securityholders to prepare their annual federal income tax returns will

be distributed to them within 90 days after the end of each financial year of the Funds.

The Manager will keep adequate books and records reflecting the activities of the Company (and the PFC

Funds) and the Purpose Trust Funds. A securityholder or his or her duly authorized representative has the

right to examine the books and records of the Company or the Fund, as the case may be, during normal

business hours at the registered office of the Manager. Notwithstanding the foregoing, a securityholder shall

not have access to any information that, in the opinion of the Manager, should be kept confidential in the

interests of the Company or the Fund(s), as applicable.

TERMINATION OF THE FUNDS

PFC Funds

A PFC Fund may be terminated by the Manager (and its shares redeemed by the Company) on at least 60

days’ notice to the shareholders of the Fund of such termination and the Manager will issue a press release

in advance thereof. Upon termination of a PFC Fund, the Constituent Securities, Other Securities, cash and

other assets remaining after paying or providing for all liabilities and obligations of the Fund shall be

distributed pro rata among its shareholders.

The rights of shareholders to exchange, redeem and switch shares described under “Redemption, Exchange

and Switches of Securities” will cease as and from the date of termination of the applicable Fund.

Purpose Trust Funds

A Purpose Trust Fund may be terminated by the Manager on at least 60 days’ notice to unitholders of such

termination and the Manager will issue a press release in advance thereof. Upon termination of a Purpose

Trust Fund, the Constituent Securities, Other Securities, cash and other assets remaining after paying or

providing for all liabilities and obligations of the Fund shall be distributed pro rata among the unitholders

of the Fund.

The rights of unitholders to exchange and redeem units of the Purpose Trust Funds described under

“Redemption, Exchange and Switches of Securities” will cease as and from the date of termination of a

Purpose Trust Fund.

PRINCIPAL SECURITYHOLDERS OF THE FUNDS

(a) ETF Shares/ETF Units

CDS & Co., the nominee of CDS, is the registered owner of the ETF Shares and ETF Units of the Funds,

which it holds for various brokers and other persons on behalf of their clients and others. From time to time,

the Funds or another investment fund managed by the Manager or an affiliate of the Manager may

105

beneficially own, directly or indirectly, more than 10% of the ETF Shares or ETF Units, as the case may

be, of a Fund.

(b) Mutual Fund Shares/Mutual Funds Units

Except as stated below, as at June 30, 2018, no person or company owns of record or, to the knowledge of

the relevant Fund or the Manager, beneficially, directly or indirectly, more than 10% of the outstanding

securities of any series of shares or class of units, as the case may be, of the Funds.


Name Type of Ownership Number of

Shares

Owned

Series Percentage of

Outstanding

Shares of

each Series

Individual A Record and Beneficial 34985 A 37%

Individual B Record and Beneficial 14505 A 16%

Individual C Record and Beneficial 172 D 76%

Purpose Investments Inc. Record and Beneficial 53 D 24%

Purpose Investments Inc. Record and Beneficial 6 I 100%

Individual D Record and Beneficial 952 XA 73%

Individual E Record and Beneficial 352 XA 27%

HBAM Holding Inc. Record and Beneficial 138,613 XF 84%



Shares

Owned


Outstanding

Shares of

each Series

Individual F Record and Beneficial 1,648 A 82%

Individual G Record and Beneficial 363 A 18%

Individual H Record and Beneficial 320 Hedged A 87%

Purpose Investments Inc Record and Beneficial 50 Hedged A 13%

The Brenda Mackie

Family Trust

Record and Beneficial 1,503 F 67%

Individual I Record and Beneficial 740 F 33%

Individual J Record and Beneficial 8,147 Hedged F 12%

Individual K Record and Beneficial 638 D 22%

Individual L Record and Beneficial 595 D 20%

Individual M Record and Beneficial 430 D 15%

Individual N Record and Beneficial 420 D 14%

Individual O Record and Beneficial 4,055 XF 63%

Individual P Record and Beneficial 2,372 XF 37%



Shares

Owned


Outstanding

Shares of

each Series

EDK Donnelly Holdings

Inc.

Record and Beneficial 8,762 D 47%

MDB2 Holdings Inc Record and Beneficial 4,381 D 24%

106

Pijoco Inc. Record and Beneficial 2,173 D 12%

*To protect the privacy of individual investors, we have omitted the name of the individual investor.

Securityholders may request a copy of the corporate records of a Fund which includes the names and details

of the number of securities owned by each securityholder in such Fund by contacting the Manager at 130

Adelaide Street West, Suite 1700, P.O. Box 83, Toronto, Ontario, M5H 3P5, in accordance with applicable

law.

(c) Manager

As of the date hereof, the following entities owned, of record more than 10% of the issued and outstanding

shares of the Manager:

Shareholder Number of Shares Percentage of Outstanding

Shares

Purpose GP Inc. 141 Voting Shares 100%

Purpose LP 3,174,1717 Class C-Non Voting

Common Shares

100%

(d) Common Shares of the Company

As of the date hereof, Purpose directly owned of record and beneficially, 100 common shares, representing

100% of the issued and outstanding common shares of the Company. Purpose will exercise the voting

powers associated with the common shares to elect the directors of the Company. There will be at all times

at least two directors who will be independent of Purpose.

INTERESTS OF MANAGEMENT AND OTHERS IN MATERIAL TRANSACTIONS

The Manager, on behalf of the one or more Funds, may enter into various Dealer Agreements with

registered dealers (that may or may not be Designated Brokers) pursuant to which the Dealers may subscribe

for ETF Shares or ETF Units, as the case may be, of the Fund(s) as described under “Purchases of Securities

– Issuance of Securities”.

The Manager will receive fees for its services to the Funds. See “Fees and Expenses”.

PROXY VOTING DISCLOSURE FOR PORTFOLIO SECURITIES HELD

The Manager has established policies and procedures with respect to the voting of proxies (the “Proxy

Voting Guidelines”) received from issuers of securities held in a Fund’s portfolio. The Proxy Voting

Guidelines provide that the Manager will vote (or refrain from voting) proxies for each Fund for which it

has voting power in the best economic interests of the Fund. The Proxy Voting Guidelines are not

exhaustive and due to the variety of proxy voting issues that the Manager may be required to consider, are

intended only to provide guidance and are not intended to dictate how proxies are to be voted in each

instance. The Manager may depart from the Proxy Voting Guidelines in order to avoid voting decisions

that may be contrary to the best interests of the Funds.

The proxies associated with securities held by the Funds will be voted in accordance with the best interests

of securities of the Funds determined at the time the vote is cast. The Manager maintains policies and

procedures that are designed to be guidelines for the voting of proxies; however, each vote is ultimately

107

cast on a case-by-case basis taking into consideration the relevant facts and circumstances at the time of the

vote.

The Manager’s proxy voting policies and procedures set out various considerations that the Manager will

address when voting, or refraining from voting, proxies, including that:

(a) the Manager will generally vote with management on routine matters such as electing corporate

directors, appointing external auditors and adopting or amending management compensation plans

unless it is determined that supporting management’s position would not be in the best interests of

the securityholders;

(b) the Manager will address on a case-by-case basis, non-routine matters, including those business

issues specific to the issuer or those raised by securityholders of the issuer with a focus on the

potential impact of the vote on the NAV of a Fund; and

(c) the Manager has the discretion whether or not to vote on routine or non-routine matters. In cases

where the Manager determines that it is not in the best interests of the securityholders to vote, or in

cases where no value is added by voting, the Manager will not be required to vote.

The Manager will post the proxy voting record on www.purposeinvest.com no later than August 31 of each

year. The Manager will send the most recent copy of the proxy voting policies and procedures and proxy

voting record, without charge, to any securityholder upon a request made by the securityholder.

MATERIAL CONTRACTS

The following contracts can reasonably be regarded as material to purchasers of ETF Shares, Mutual Fund

Shares, ETF Units or Mutual Fund Units, of the Funds, as the case may be:

(a) the articles of incorporation of the Company (applicable to the PFC Funds only);

(b) the Management Agreement (applicable to the PFC Funds only) referred to under “Organization

and Management Details of the Funds –The Manager, Promoter and Trustee – Details of the

Management Agreement – PFC Funds”;

(c) the Investment Advisory Agreement referred to under “Organization and Management Details of

the Funds – The Investment Advisor – Details of the Investment Advisory Agreement”;

(d) the PFC Custodian Agreement (applicable to the PFC Funds only) referred to under “Custodian

and Securities Lending Agent – PFC Funds”;

(e) the PTF Custodian Agreement (applicable to the Purpose Trust Funds only) referred to under

“Custodian and Securities Lending Agent – Purpose Trust Funds”; and

(f) the Declaration of Trust (applicable to the Purpose Trust Funds only) referred to under

“Organization and Management Details of the Funds – The Manager, Promoter and Trustee –

Details of the Declaration of Trust – Purpose Trust Funds”.

Copies of the foregoing agreements, together with the articles of incorporation and by-laws of the Company,

may be examined during normal business hours at the registered office of the Manager.


108

EXPERTS

Osler, Hoskin & Harcourt LLP, legal counsel to the Funds, the Company and the Manager, has provided

certain legal opinions on the principal Canadian federal income tax considerations that apply to an

investment in the Funds by an individual resident in Canada. See “Income Tax Considerations” and

“Eligibility for Investment”. As of the date hereof, partners and associates of Osler, Hoskin & Harcourt

LLP beneficially owned, directly or indirectly, less than 1% of the outstanding securities of the Funds.

Ernst & Young LLP, the auditor of the Funds, has consented to the incorporation by reference of its report

on the Funds dated April 2, 2018. Ernst & Young LLP has advised that they are independent with respect

to the Funds within the meaning of the Rules of Professional Conduct of the Chartered Professional

Accountants of Ontario.

EXEMPTIONS AND APPROVALS

The Funds have received exemptive relief from the Canadian securities regulatory authorities to permit the

following:

(a) the purchase by a securityholder of a Fund of more than 20% of the ETF Shares or ETF Units, as

the case may be, of that Fund through purchases on a stock exchange without regard to the take-

over bid requirements of securities legislation;

(b) to relieve the Funds from the requirement that a prospectus contain a certificate of the underwriters;

(c) to relieve the Funds from the requirement to include in the prospectus a statement respecting

purchasers’ statutory rights of withdrawal and remedies of rescission as prescribed in item 36.2 of

Form 41-101F2 – Information Required in an Investment Fund Prospectus;

(d) subject to certain conditions, to permit the entity making the initial investment in a Fund to redeem

such initial investment;

(e) to treat the ETF Shares and the Mutual Fund Shares of each class of shares of the Company as if

such shares were separate funds in connection with their compliance with the provisions of Parts

9, 10 and 14 of NI 81-102;

(f) subject to certain conditions, to permit the Funds to purchase a security of an underlying ETF or

enter into a specified derivatives transaction with respect to an underlying ETF even though,

immediately after the transaction, more than 10% of the NAV of the Fund would be invested,

directly or indirectly, in the securities of the underlying ETF;

(g) subject to certain conditions, to permit the Funds to purchase securities of an underlying ETF such

that, after the purchase, the Fund would hold securities representing more than 10% of: (i) the votes

attaching to the outstanding voting securities of the underlying ETF; or (ii) the outstanding equity

securities of the underlying ETF;

(h) subject to certain conditions, to permit the Funds to invest in exchange-traded mutual funds that

are not subject to National Instrument 81-101 – Mutual Fund Prospectus Disclosure; and

(i) subject to certain conditions, to permit each Fund to pay brokerage commissions in relation to its

purchase and sale on a recognized exchange of exchange traded mutual funds that are managed by

Purpose or an affiliate of Purpose.

109

The Purpose Enhanced US Equity Fund has received exemptive relief from the Canadian securities

regulatory authorities to permit the Fund to utilize leverage to achieve market exposure to its portfolio

targeted at 130% of the Fund’s NAV and borrow up to 35% of the Fund’s NAV to implement its investment

strategies subject to the conditions set forth therein.

Additionally, certain dealers of the Funds, including the Designated Brokers and Dealers, have received

exemptive relief from the Canadian securities regulatory authorities from the requirement that a dealer, not

acting as agent of the purchaser, who receives an order or subscription for a security offered in a distribution

to which the prospectus requirement of the securities legislation of the Provinces and Territories apply, send

or deliver to the purchaser or its agent, unless the dealer has previously done so, the latest prospectus and

any amendment either before entering into an agreement of purchase and sale resulting from the order or

subscription, or not later than midnight on the second Business Day after entering into that agreement. As

a condition of this exemptive relief, the dealer is required to deliver a copy of the ETF Summary Document

of the applicable Fund to a purchaser of ETF Shares or ETF Units, as the case may be, if the dealer does

not deliver a copy of this prospectus.

PURCHASERS’ STATUTORY RIGHTS OF WITHDRAWAL AND RESCISSION


Securities legislation in some Provinces gives you the right to withdraw from an agreement to buy mutual

funds within two business days of receiving the prospectus or fund facts, or to cancel your purchase within

48 hours of receiving confirmation of your order.

Securities legislation in some Provinces and Territories also allows you to cancel an agreement to buy

shares or units and get your money back or to make a claim for damages, if the prospectus, annual

information form, fund facts or financial statements misrepresent any facts about the Fund. These rights

must usually be exercised within certain time limits.

For more information, refer to the securities legislation of your Province or Territory or consult your lawyer.


Securities legislation in certain of the Provinces and Territories of Canada provides purchasers with the

right to withdraw from an agreement to purchase ETF Shares or ETF Units within 48 hours after the receipt

of a confirmation of a purchase of such securities. In several of the Provinces and Territories, the securities

legislation further provides a purchaser with remedies for rescission or, in some jurisdictions, revisions of

the price or damages if the prospectus and any amendment contains a misrepresentation, or non-delivery of

the ETF Facts, provided that the remedies for rescission, revisions of the price or damages are exercised by

the purchaser within the time limit prescribed by the securities legislation of the purchaser’s Province or

Territory.

The purchaser should refer to the applicable provisions of the securities legislation of the Province or

Territory for the particulars of these rights or consult with a legal advisor.

DOCUMENTS INCORPORATED BY REFERENCE

Additional information about the Funds is or will be available in the following documents:

(a) the most recently filed comparative annual financial statements of the Funds, together with the

accompanying report of the auditor;

110

(b) any interim financial statements of the Funds filed after the most recently filed comparative annual

financial statements of the Funds;

(c) the most recently filed annual management report of fund performance (“MRFP”) of the Funds;

(d) any interim MRFP of the Funds filed after the most recently filed annual MRFP of the Funds; and

(e) the most recently filed ETF Facts of the Funds.

These documents are or will be incorporated by reference into, and form an integral part of, this prospectus.

These documents may be obtained upon request, at no cost, by calling 1-877-789-1517, by emailing

Purpose at [email protected] or by contacting a registered dealer. These documents and other

information about the Funds is also available on Purpose’s website at www.purposeinvest.com and/or on

SEDAR at www.sedar.com.



http://www.sedar.com/

C-1

CERTIFICATE OF THE COMPANY (ON BEHALF OF THE PFC FUNDS), MANAGER AND

PROMOTER

Dated: August 3, 2018

This prospectus, together with the documents incorporated herein by reference, constitutes full, true and plain

disclosure of all material facts relating to the securities of PFC Funds offered by this prospectus as required by the

securities legislation of all of the provinces and territories of Canada.

PURPOSE FUND CORP.

(Signed) “Som Seif”

SOM SEIF

Chief Executive Officer

(Signed) “Scott Bartholomew”

SCOTT BARTHOLOMEW

Chief Financial Officer

On behalf of the Board of Directors

(Signed) “Douglas G. Hall”

DOUGLAS G. HALL

Director

(Signed) “Randall C. Barnes”

RANDALL C. BARNES

Director

PURPOSE INVESTMENTS INC.

as manager of the PFC Funds


SOM SEIF



SCOTT BARTHOLOMEW




SOM SEIF

Director


SCOTT BARTHOLOMEW

Director

(Signed) “Jeffrey Mitelman”

JEFFREY MITELMAN

Director


as Promoter of the PFC Funds


SOM SEIF


C-2

CERTIFICATE OF THE PURPOSE TRUST FUNDS, TRUSTEE, MANAGER AND PROMOTER

Dated: August 3, 2018

This prospectus, together with the documents incorporated herein by reference, constitutes full, true and plain

disclosure of all material facts relating to the securities of the Purpose Trust Funds offered by this prospectus as

required by the securities legislation of all the provinces and territories of Canada.


as trustee and manager of the Purpose Trust Funds


SOM SEIF



SCOTT BARTHOLOMEW




SOM SEIF

Director


SCOTT BARTHOLOMEW

Director

(Signed) “Jeffrey Mitelman”

JEFFREY MITELMAN

Director


as Promoter of the Purpose Trust Funds


SOM SEIF


PROSPECTUS - Purpose Investments · 2018-10-29 · to a maximum of 130% of its net assets. Use of...

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